Raj Rajaratnam

May 11, 2011 by staff 

Raj RajaratnamRaj Rajaratnam, A federal jury in Manhattan convicted raj Rajaratnam, the billionaire investor who once ran one of the largest hedge funds in the world, of fraud and conspiracy. He is the most prominent figure condemned the government crackdown on insider trading on Wall Street.

Rajaratnam, who was convicted of all 14 charges, could face up to 19 ½ years in prison under federal sentencing guidelines, prosecutors said Wednesday. The law allows up to 25 years. He should be sentenced on 29 July. Rajaratnam, wearing a black suit and tie, khaki green, was expressionless; the verdict was read in the room overflowing.

His lawyer, John Dowd, said he would appeal. Prosecutors asked that Rajaratnam be placed in custody, arguing he was a flight risk. They said they had the means to leave the country, noting that he owned property in Sri Lanka and Singapore.

Judge Richard J. Holwell ordered house arrest and electronic surveillance.

A person who answered the phone at home Rajaratnam and only describe himself as a family friend expressed surprise at the verdict. Rajaratnam “I was sure that nothing would happen,” said

About a half dozen jurors declined to comment when leaving the courthouse.

BJ Kang, FBI special agent who led the investigation of Rajaratnam, said he was “happy for justice in court.

Preet Bharara, U.S. Attorney in Manhattan, prosecutors presented the case against Rajaratnam, said: “The message today is clear – there are rules and laws, and apply to everyone, no matter who you are or how much money you have.

Bharara noted that in the past 18 months, his office had charged 47 people with insider information. Rajaratnam is the 35 Th to be condemned.

The government built its case against wiretapping evidence Rajaratnam with powerful. Over a span of nine months in 2008, federal agents secretly recorded phone conversations Rajaratnam. Rajaratnam heard in so blatantly and casually matter exchange tips stock inside corporate information and fellow traders.

“Yesterday I heard someone on the board of Goldman Sachs is going to lose and 2 per share,” Rajaratnam said one of his employees before the announcement of bank profits.

“One thing we know, this is very confidential, someone is going to get a list of conditions Spansion,” said a colleague, referring to a proposed acquisition of Technology Company.

“So yesterday agreed to at least have shaken hands,” said an informant Rajaratnam on next agreement involving another publicly traded company. “So I think that, uh, now you can just buy.”

For years, Rajaratnam was feted as one of the most skilled investors on Wall Street. At its peak, his hedge fund Galleon Group and has secured more than $ 7 million in assets. Investment banks like Goldman Sachs and Morgan Stanley, Galleon counted, which paid about 300 million in annual trading commissions to brokerage firms, as one of its largest commercial customers.

In the early morning hours of October 16, 2009, federal agents arrested Rajaratnam in his Sutton Place apartment on the East Side of Manhattan. The government put him in the center of a vast conspiracy of privileged information, accusing him of using a corrupt network of forecasts to make tens of millions of dollars in illegal trading profits in stocks, including Google and everyone Hilton.

The case has led to accusations of insider trading against 25 defendants – 21 of whom have pleaded guilty – including former executives from IBM, Intel and Bear Stearns.

Rajaratnam fought the charges against him, insisting he had done nothing wrong. His chief lawyer, Dowd, said his client’s success as an administrator of the money came from the “shoe leather investigation, diligence and hard work.”

He based his defense on the mosaic theory of so-called investment. Galleon was famous for his dogged digging for information about publicly traded companies formed a “mosaic” – a complete picture of the prospects of a company that gave it an advantage for investment in other investors.

Rajaratnam lawyers argued that all of their illegal trade is based on newspaper articles to the public,anlysts and press reports of the news business. For example, the defense presented evidence that before Advanced Micro Devices acquired ATI Technologies – a deal that prosecutors said Rajaratnam had received an illegal tip about – 51 news articles and six reports ofanlysts speculated on the possibility of a merger between two companies.

Prosecutors defend dismantled Rajaratnam Galleon made recognizing that legitimate research. But at the same time, they argued, the firm routinely violated securities laws. In the words of a former portfolio manager Galleon who testified during the trial, the company did their homework – but also cheated on the test.

“The accused knew the rules, but did not care,” said a prosecutor, Reed Brodsky, in his summary. “Cheating has become part of their business model.”

Rajaratnam arrest stopped a remarkable success on Wall Street. A native of Sri Lanka, Rajaratnam came to America in 1981 to study business at the prestigious Wharton School of the University of Pennsylvania. He joined Needham & Company, a small investment bank and a reputation as an expert in technology companies.

His rise coincided with the tech boom of the 1990s and the rise of hedge funds – a pocket once dark world of investing – a powerful force on Wall Street. When he formed his own hedge fund, Galleon Group, in 1997, his services were in hot demand. Rajaratnam superior investment results showed that attracts blue chip investors such as the state’s New Jersey pension and UBS, the giant Swiss bank.

Mr. Rajartnam galleon brought great wealth. Forbes magazine connected to the net assets and 1.3 billion. He owns a second home in the wealthy suburb of Greenwich, Connecticut, and a condominium in the Setai Hotel in Miami Beach. During the trial, former friends Rajaratnam said the jury on luxury holidays, including for his 50th birthday, hire a private jet to fly dozens of relatives and friends for a safari in Kenya.

Very competitive, Rajaratnam could be heard in court on wiretaps talking in sports and military metaphors. Compared to the fight against Muhammad Ali in the boxing ring and said during the financial crisis, “I feel the pain, but can not kill me. I am a warrior.”

That competitiveness is causing Rajaratnam, despite his facing a flood of evidence against him, to fight the charges against him, according to two former employees who requested anonymity Galleon.

“Raj lose hated and loved a good fight,” said a former colleague. “It’s a big sports fan, and I think in some way to do this essay as a contest.”

Another said Rajaratnam is proud of its achievements and refused to admit the allegations.

“In this way, Raj can say that he was unjustly accused,” he said.

The origins of case stretching over a decade, but a turning point came in 2006 during an investigation of a hedge fund managed by Rengan Rajaratnam, Rajaratnam’s younger brother and a former employee of Rajaratnam Galleon. In reviewing the emails and instant messages, Andrew Michaelson, now a member of the team that prosecuted Raj Rajaratnam, discovered incriminating communications between the brothers.

Rengan Rajaratnam, who has not been charged criminally, sprang – through several telephone conversations – as a figure of colors during the trial. On a call in August 2008, Rengan told his brother about his efforts to pressure his friend, a McKinsey consultant, to obtain confidential information.

Rengan Rajaratnam consultant called “a little dirty” and boasted that “finally spilled his beans” to share secrets about a corporate client.

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