Raj Rajaratnam’s criminal trial for insider trading began with the prosecution saying the Galleon Group founder used an illegal network of secret sources to earn millions of dollars in illicit profits, while his defence claimed he made decisions based only on public information.
Rajaratnam is the central figure in the largest investigation of hedge-fund insider trading in US history. He is accused of making $45 million from confidential information leaked by corporate insiders and hedge-fund traders. Rajaratnam faces as long as 20 years in prison if convicted of fraud.
“He exploited a corrupt network of people,” Assistant US Attorney Jonathan Streeter said yesterday of the 53-year-old Rajaratnam. “Using this network, he bought business information. Using this network, he had his employees go out and bring information to him. This was all information that ordinary people didn’t have.”
“Rajaratnam traded on such information again and again and again,” Streeter said.
Streeter told jurors that they’ll hear Rajaratnam committing crimes in “real time” as they listen to government wiretaps. Rajaratnam told his accomplices to “trade stocks in a way that would hide” their insider trading and to “create a paper trail” that would conceal the illegal tips, Streeter said.
Though Rajaratnam “knew tomorrow’s business news today” because he had inside information, Streeter said, he didn’t know that “the FBI was listening in”.
