A federal jury convicted Galleon Group founder Raj Rajaratnam on all 14 counts of securities fraud and conspiracy, providing the U.S. with a significant win in a push to prosecute insider trading on Wall Street and in corporate America.
The verdict by the 12-member jury, following 11 days of deliberation, capped a blockbuster trial that started in early March featuring 45 recorded calls showing how the hedge-fund executive trafficked in insider tips provided to him by a web of contacts at the top tier of American business.
The widely watched trial exposed the behind-the-scenes dealings of a once-prestigious hedge fund that gained access to highly sensitive information about, among other things, Goldman Sachs Group Inc. at the height of the financial crisis. The government put at $63.8 million the amount in illegal profits and avoided losses Galleon realized through the scheme.
Mr. Rajaratnam, 53 years old, showed no emotion or reaction as the verdict was read. He was still in courtroom immediately after the verdict, and he will remain free until sentencing.
Outside court, lead defense attorney John Dowd said he planned an appeal. “The case started out with 37 stocks and is down to 14,” he said. “The score is 23-to-14 in favor of the defense. We’ll see you in the Second Circuit.”
The jurors all looked serious, some looking down. When the judge’s deputy polled the jury to see if it was their verdict, the last jurors said “Yes,” very loudly.
U.S. District Judge Richard Holwell instructed jurors not to discuss the verdict, and released them from the courtroom. They were escorted away by court security officers.
But juror Leila Gorman Gonzalez, swiping a subway card to get on a train a block from the courthouse, said of the verdict, “There was just a lot of evidence.” She said she was “relieved” that the trial was over, and declined to comment further.
The judge rejected a request to incarcerate Mr. Rajaratnam despite the contention of Assistant U.S. Attorney Jonathan Streeter that he might flee because he faces a long sentence, has tens of millions of dollars overseas and strong ties to his home country of Sri Lanka. “He is obviously a risk of flight,” Mr. Streeter said.
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