In the end, the verdict was as simple as it was devastating: guilty on all counts.
On Wednesday a jury handed U.S. authorities a historic victory in a trial that has riveted Wall Street and beyond with its portrait of a sprawling scheme to reap illegal profits from inside information.
The man at the centre of the web, Raj Rajaratnam, was a titan in the hedge fund industry who once managed billions of dollars and travelled in the upper echelons of American finance. Now he is a convicted felon who faces up to 25 years in prison.
The jury found Mr. Rajaratnam, 53, guilty of fourteen counts of securities fraud and conspiracy. Thanks to a flow of illicit tips, Mr. Rajaratnam made profits and avoided losses of $64-million (U.S.), prosecutors said, through trades that involved big-name companies like Goldman Sachs Group Inc., Intel Corp. and Google Inc.
The successful prosecution of Mr. Rajaratnam, the founder of Galleon Group, will send a chill through the ranks of professional investors. To gather incriminating evidence, investigators made extensive use of wiretaps, a tactic formerly reserved for the likes of drug traffickers and mafia dons.
Such recordings provided prosecutors with ammunition against Mr. Rajaratnam and a host of others, spawning follow-up investigations that are not yet complete. Since late 2009, federal prosecutors in Manhattan have charged 47 people with insider trading crimes.
Mr. Rajaratnam was "one of the most educated, successful and privileged professionals in the country. Yet, like so many others recently, he let greed and corruption cause his undoing," Preet Bharara, the top federal prosecutor in Manhattan, said in a statement. "We will continue to pursue and prosecute those who believe they are both above the law and too smart to get caught."
Sitting at a table with his lawyers, Mr. Rajaratnam betrayed no emotion as the verdict was read out Wednesday. His lawyer pledged to challenge the outcome in an appeal contesting the government's use of wiretapped recordings. Mr. Rajaratnam will be subject to electronic monitoring at his home until his sentencing in late July.
With Wednesday's conviction, Mr. Rajaratnam takes his place in the pantheon of formerly high-flying business figures guilty of financial crimes, ranging from junk-bond king Michael Milken to Enron president Jeffrey Skilling to Tyco International chief executive officer L. Dennis Kozlowski.
Big-name cases have a "general deterrent value but [also]send a particular message," said Sam Buell, a law professor at Duke University and a former federal prosecutor. "Don't think that just because you're one of the people who operate in the stratosphere of this stuff that you're beyond getting caught."
The verdict in Mr. Rajaratnam's trial could provide a boost to other ongoing efforts to crack down on insider trading. One such probe focuses on the role of so-called expert networks, firms that match investors with sources of expertise. U.S. authorities have alleged in a number of cases that such firms in fact acted as conduits for confidential information about companies.
Prosecutors will be emboldened by their victory against Mr. Rajaratnam, experts said. "Where they may have been holding some cases and not yet filing them, now they can just rock and roll," said Jacob Frenkel, a former federal prosecutor and partner at law firm Shulman Rogers. "I think we'll see a good number of cases roll out now that the verdict is in."
Mr. Rajaratnam's trial, the biggest to target insider trading in decades, featured testimony from long-time friends and business associates, many of whom had agreed to co-operate with authorities to lessen their own sentences.
It also ensnared Rajat Gupta, the former head of consulting firm McKinsey & Co. and a much-respected figure in American boardrooms. The U.S. Securities and Exchange Commission has alleged that Mr. Gupta passed inside information gleaned from his positions as a director at Goldman Sachs and Procter & Gamble Co. to Mr. Rajaratnam, a close friend. Mr. Gupta denies the allegations, which do not involve criminal charges.
Mr. Rajaratnam, a native of Sri Lanka, earned a graduate degree from the Wharton School at the University of Pennsylvania and later went on to build a massive hedge fund firm from the ground up. He never took the stand in his own defence over the course of his two-month trial, but jurors heard his voice on 45 recordings played by the prosecution.
In October, 2008, for instance, Mr. Rajaratnam was secretly recorded talking to a colleague about how Goldman Sachs was set to record a loss rather than a gain for the quarter then under way, something unprecedented for the firm.
"I heard yesterday from somebody who's on the board of Goldman Sachs that they are going to lose $2 per share. The Street has them making $2.50," Mr. Rajaratnam said.
He could also be heard discussing imminent deals or earnings releases involving a number of technology companies well before such information became public. In two calls, Mr. Rajaratnam advised on how to conceal trading based on illegal tips, whether by sending e-mail messages to create a fake cover story or by buying and selling in a way that would mislead investigators.