Galleon hedge fund founder Raj Rajaratnam guilty to fraud now faces jail

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Hedge fund billionaire Raj Rajaratnam has been found guilty of insider dealing, becoming the highest-profile scalp in the history of such investigations in the US. He now faces up to 20 years in prison.

The 53-year-old co-founder of the Galleon group was found guilty of 14 charges of securities fraud and conspiracy after a trial in New York.

Prosecutors accused the Sri Lankan-born billionaire of making $63.8m (£39m) from tips by corporate insiders and hedge-fund traders, and used controversial surveillance techniques to secure the conviction.

Rajaratnam was arrested in October 2009 and the government's investigation has widened to other hedge funds, so-called expert network firms, banks and technology companies. Some 19 people have pleaded guilty in the investigation.

The eight women and four men of the jury took 11 days to reach a verdict. Their decision was delayed after one juror was excused on medical grounds and a replacement had to be brought in.

The trial began on 8 March and involved some of the biggest names in US business. Rajaratnam was the most prominent corporate prosecution since the credit crunch. Unlike fraudster Bernard Madoff, Rajaratnam maintained he was innocent and assembled a high-powered defence team.

Goldman Sachs boss Lloyd Blankfein was called to give evidence after prosecutors alleged former Goldman director Rajat Gupta had leaked confidential information he had received from Blankfein. As well as insiders at Goldman, the hedge fund boss was accused of using a network of informants to make illegal profits; the informants worked for companies including Intel and the top consultancy group McKinsey, where former partner Anil Kumar testified about his involvement; Rajat Gupta, too, was formerly with McKinsey.

Prosecutors secretly recorded thousands of conversations between Rajaratnam and his associates, a technique more usually associated with crackdowns on mafia rings and drug traffickers. His defence team fought unsuccessfully to have the wiretaps declared inadmissable. The jurors requested to hear dozens of the tapes again as they deliberated.

This week the jurors asked to hear tapes of conversations between Rajaratnam and Rajiv Goel, a former Intel executive who pleaded guilty to insider dealing and was the government's star witness.

The two discussed an investment by Intel in a wireless network company to be formed by Clearwire and Sprint Nextel and the planned acquisition of PeopleSupport by Essar Group, an Indian company.

Rajaratnam argued that he based the trades on research and information that was already in the public domain.

Manhattan US attorney Preet Bharara, who has lead the crackdown on insider trading, is currently in the midst of pursuing other large insider-trading investigations.
Guardian.co.uk

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[AUSSIELTTE]

wanna see him dead in jail

[mikemer79]

@RayKalmNiam yes

[craigenputtock]

What a stupid comment for the lawyer to make about these guys not being mobsters. THEY ARE MOBSTERS---and they're doing a lot more damage to people's lives than Al Capone ever did.

[ANGELSVEN]

10 years and 10 mil. is nothing to this guy. he'll probably get out in 7 yrs. he's the BIGGEST HEDGE FUND CROOK TO BE PROSECUTED YET and yet this is a mere slap on the hand. all lthe other rats hiding in their holes must be laughing thinking a) "either i won't get caught" or b) "if i get caught, i'll be out in a few years...no big deal." the message sent to these crooks is "crime pays." why has this happened? because everybody is in bed with everybody, figuratively speaking. it's just sad.

[rvrola]

THE OLIGARCHY IS ON A PICK AND SAVE MODE. FALL GUYS WILL PROP UP TO GIVE THE ILLUSION THAT THE SYSTEM IS BEING REFORMED. THE TRUTH IS THE WHOLE MONETARY SYSTEM HAS ALWAYS BEEN A FRAUD FOR DECADES. GO TO THE LAROUCHE WEBSITE TO EDUCATE YOURSELVES ABOUT WHAT A REAL ECONOMY SHOULD BE LIKE - GOOD FOR ALL AND NOT FOR A FEW.

[RayKalmNiam]

He's Sri Lankan, right?