Earlier this morning Sri Lanka-born Raj Rajaratnam, co-founder of the Galleon Group, was convicted of 5 conspiracy charges and 9 securities fraud charges related to insider trading. Rajaratnam was accused of using the inside information to make trades that made the Galleon Group’s hedge funds approximately $68 million in profits and avoided losses. His defense claimed that all the information he traded on was publicly available.
The verdict came from the U.S. District Court in Manhattan after more than two weeks of deliberation and more than two months after the trial began. During the trial prosecutors presented extensive evidence against Rajaratnam, including text messages, trading records and wiretapped phone conversations. There were approximately 45 tapes used in the case, which represented one of the most extensive uses of wiretaps in a white-collar case.
The Galleon probe has resulted in more than two dozen arrests and 21 guilty pleas. It has also led to a second investigation aimed at consultants in the securities industry who pass off inside information as the product of legitimate research. Rajaratnam will remain free on bail, with electronic monitoring, until his July 29 sentencing. He faces up to 25 years in prison.
