Rajaratnam found guilty of insider trading

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New York, May 12: The Sri Lankan born former Wall Street titan, Raj Rajaratnam founder of Galleon, was finally convicted for insider trading. The dramatic case started when FBI arrested Raj Rajaratnam on October 16, 2009, and pressed charges of insider-trading. The trial was carried at the federal court in Manhattan. This is the most sensational case of insider trading in the history of corporate America.

Rajaratnam was found guilty by the juror on five counts of conspiracy and nine counts of securities fraud charges. According to legal experts, for these 14 counts he could face a jail term which could be of approximately 15-25 years. Although one legal expert stated that under the maximum term of sentencing Rajaratnam could face was 15-20 years for each count of conspiracy and then 24-37 months for each count of insider trading.

The former wall street titan, made a fortune by getting company officials to give him tips, therefore, providing him the illegal edge. In turn this allowed him to carry the blockbuster trades in technology and other stocks.

The 12 member jury deliberated for 11 days on the case and came out with the verdict that Rajaratnam was guilty.

Prosecutors had alleged that Rajaratnam made profits which were worth more than $60 million from these illegal tips. They said, Galleon Group funds which were founded and led by Rajaratnam became a multibillion-dollar success only because the ordinary stock investors did not have the advance notice about the earnings of public companies and also of the mergers and acquisitions.

This conviction will give the SEC the teeth to go after the cases of insider-trading. Over the last 18 months, criminal charges have been brought against 47 hedge-fund managers and others with insider trading. Rajaratnam's case was the 35th defendant who was convicted or had plead guilty.

In Rajaratnam's trial, the biggest advantage for the prosecutors was when they played tapes of the Galleon founder getting tips from his associates. In few of these conversations, it was recorded on his suggestions in how to cover the tracks and evade detection.

This case will bring in new impetus against insider trading. Also, it will not be surprising if using wiretaps against traders become common. Also the verdict will give future defendants, who are facing similar evidences, an idea on their chances to win an acquittal under similar set of evidence.

Next month a new case will start on the charges of insider-trading, though, it is related to Galleon.

OneIndia News

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