Insider trading trial set to start
By Grant McCool |
March 9, 2011, Wednesday
|
Print Edition
Print Edition
THE criminal trial of Galleon hedge fund founder Raj Rajaratnam began yesterday in New York City with jury selection in a case at the heart of the biggest insider trading investigation in a generation.
Sri Lankan born Rajaratnam, 53, is the former head of the Galleon Group hedge fund that once managed US$7 billion.
He could face a 20-year jail sentence if convicted on the most serious charge of securities fraud.
Since arresting Rajaratnam in October 2009 and announcing charges against 26 former traders, executives and lawyers, the US government has pressed ahead with what it calls the biggest probe of insider trading in the US$1.9 trillion hedge fund industry.
Prosecutors allege Rajaratnam made US$45 million in illicit profits through tips from former friends and associates. Nineteen people have pleaded guilty in the case, which stands apart from past insider trading probes because of the government's wide-scale use of phone taps.
The selection of a 12-member jury in Manhattan federal court is the first opportunity for prosecutors and defense lawyers to score points at trial after 16 months of jousting over wiretaps and other evidence. Opening statements will start once the panel is in place for a trial expected to last up to two months.
Rajaratnam is free on bail but fighting to stay out of prison in a saga involving leaked company secrets, phone taps and former friends, who will testify against him for the government.
It is not known whether Rajaratnam will testify in his own defense after the jury has heard hours of tapes and testimony from as many as six cooperating witnesses. Prosecutors say they could present up to 173 recordings of telephone conversations.
Among those who could be called by the government to testify is Lloyd Blankfein, chief of Goldman Sachs Group Inc.
Prosecutors and regulators have accused former Goldman board member Rajat Gupta of leaking information about the bank to his friend Rajaratnam, but Gupta has not been criminally charged.
Sri Lankan born Rajaratnam, 53, is the former head of the Galleon Group hedge fund that once managed US$7 billion.
He could face a 20-year jail sentence if convicted on the most serious charge of securities fraud.
Since arresting Rajaratnam in October 2009 and announcing charges against 26 former traders, executives and lawyers, the US government has pressed ahead with what it calls the biggest probe of insider trading in the US$1.9 trillion hedge fund industry.
Prosecutors allege Rajaratnam made US$45 million in illicit profits through tips from former friends and associates. Nineteen people have pleaded guilty in the case, which stands apart from past insider trading probes because of the government's wide-scale use of phone taps.
The selection of a 12-member jury in Manhattan federal court is the first opportunity for prosecutors and defense lawyers to score points at trial after 16 months of jousting over wiretaps and other evidence. Opening statements will start once the panel is in place for a trial expected to last up to two months.
Rajaratnam is free on bail but fighting to stay out of prison in a saga involving leaked company secrets, phone taps and former friends, who will testify against him for the government.
It is not known whether Rajaratnam will testify in his own defense after the jury has heard hours of tapes and testimony from as many as six cooperating witnesses. Prosecutors say they could present up to 173 recordings of telephone conversations.
Among those who could be called by the government to testify is Lloyd Blankfein, chief of Goldman Sachs Group Inc.
Prosecutors and regulators have accused former Goldman board member Rajat Gupta of leaking information about the bank to his friend Rajaratnam, but Gupta has not been criminally charged.
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