For the last six weeks, a group of jurors has assembled in a wood-panelled courtroom in lower Manhattan to listen to a story about the world of high finance. Depending on which side you believe, it is either a tale of greed and deceit or one of smarts and hard work.
On Wednesday, federal prosecutors began their final push to persuade jurors that hedge-fund titan Raj Rajaratnam used illegal tips from a web of conspirators to generate tens of millions of dollars in profits. The evidence of his guilt, they argued, is "devastating."
At stake is the outcome of the largest insider-trading trial in decades. The investigation has ensnared not just Mr. Rajaratnam but scores of friends and associates, including a former member of the board of directors of Goldman Sachs Group Inc.
The case has relied heavily on the use of wiretapped conversations, a tactic once reserved for the pursuit of mafia members or drug kingpins. Such recordings "stripped away the veil of legitimacy" surrounding Mr. Rajaratnam's trades, a federal prosecutor said Wednesday, generating incriminating evidence "directly from the defendant's own voice."
Prosecutors spent much of the day summing up their case. Once Mr. Rajaratnam's lawyers conclude their own closing arguments, the jury will begin its deliberations, either later this week or early next.
Reed Brodsky, a federal prosecutor in Manhattan, stood at a lectern before the jury box and argued Mr. Rajaratnam "corrupted his friends and employees" in his drive to "conquer the stock market at the expense of the law." Prosecutors say that between 2003 and 2009, Mr. Rajaratnam used secret tips to earn profits and avoid losses to the tune of $64-million (U.S.).
Mr. Rajaratnam, the 53-year-old founder of Galleon Group, maintains his innocence. While he did not take the stand, his lawyers argued that his trades were based on extensive research and publicly available information. On Wednesday, Mr. Rajaratnam listened to the proceedings with an impassive expression, surrounded by a small army of lawyers. If convicted, he could spend up to 25 years in prison.
Mr. Brodsky took jurors through a rapid-fire review of the prosecution's case, quoting from transcripts of secretly recorded conversations and at times playing the recordings themselves.
He challenged defence lawyers to provide an explanation for two calls in which Mr. Rajaratnam appears to be discussing ways to conceal trading based on illegal tips. In one, he suggests to two associates that they send each other e-mail messages noting that a particular stock looks attractive - an effort to create a "phony cover story," Mr. Brodsky said, in the event that the authorities ever scrutinized their trades.
The tips Mr. Rajaratnam allegedly received concerned big-name companies such as Google Inc., eBay Inc. and Intel Corp. Prosecutors also accuse him of trading on the basis of inside information he learned from Rajat Gupta, former head of McKinsey & Co. who served on the board of Goldman Sachs until last year.
During the worst days of the financial crisis in late 2008, Mr. Gupta telephoned Mr. Rajaratnam seconds after hanging up from a conference call of Goldman board members - a call during which Mr. Gupta learned that Warren Buffett would be investing $5-billion in the bank. Within minutes, Mr. Rajaratnam had snapped up millions of dollars' worth of Goldman shares, which soared when the news became public.
Earlier in the trial, Goldman's chief executive officer Lloyd Blankfein testified that Mr. Gupta had violated his duty as a director by revealing confidential details of the board's deliberations to Mr. Rajaratnam. Mr. Gupta has denied any wrongdoing.
Mr. Blankfein wasn't the only luminary to take the stand. Geoffrey Canada, a prominent education advocate in New York who is president of the Harlem Children's Zone, made a brief appearance in which he attested to Mr. Rajaratnam's generous support for his organization.Report Typo/Error