U.S. prosecutors stung accused Galleon hedge fund founder Raj Rajaratnam with one more phone tap recording as his lawyers rested the defence case on Monday at his trial on insider trading charges.
Mr. Rajaratnam, the central figure in the biggest Wall Street insider trading trial in decades, sat expressionless in Manhattan federal court as the jury heard a Sept. 30, 2008, FBI phone tap with co-conspirator and fellow trader Danielle Chiesi.
"Look, the other thing is right, it's been widely speculated. What people don't know is the time," Mr. Rajaratnam was heard telling Mr. Chiesi as they discussed chip maker Advanced Micro Devices Inc.'s then imminent sale of a manufacturing business.
The recording was played during a brief prosecution rebuttal to the defence case, which rested on Monday. The jury will hear closing arguments from both sides starting on Wednesday.
Through dozens of phone taps and friends-turned-government witnesses, the government sought to prove that Mr. Rajaratnam timed his trades according to inside tips he received. The defence argued that much of the information was already public through research, analysis and media reports.
Secretly recorded phone conversations have been a hallmark of the government's case against Mr. Rajaratnam, who is accused of making $63.8-million (U.S.) illicitly between 2003 and March, 2009. Nineteen out of 26 people charged in the broad Galleon case have pleaded guilty to conspiracy or securities fraud, including Mr. Chiesi. Three others testified against Mr. Rajaratnam.
Sri Lankan-born Mr. Rajaratnam vowed to clear his name at the trial, which started on March 8. His multimillion dollar team of lawyers from Akin Gump Strauss Hauer & Feld LLP did not call Mr. Rajaratnam to the witness stand to testify in his defence.
"Putting Rajaratnam on the stand would have been a mistake," said Ron Geffner of law firm Sadis & Goldberg LLC, who is not involved in the case. "He would have potentially put himself at risk for perjury, or hurt his case with the jury by not being able to openly testify."
The week-long defence, in response to five weeks of prosecution evidence, consisted of a barrage of data in charts, graphs and documents. Much of the wiretap evidence was not directly rebutted.
Mr. Rajaratnam, 53, could receive a prison sentence of up to 25 years if he is convicted on 14 counts of conspiracy and securities fraud. He was arrested in October, 2009, and Galleon, which had $6.5-billion under management at its peak, was wound down without losses to investors.
A business professor livened up the trial earlier on Monday in some testy exchanges with a U.S. prosecutor pressing him on his analysis of the hedge fund founder's stock trades.
The tension between the defence witness, University of Rochester Simon Business School professor Gregg Jarrell, and prosecutor Jonathan Streeter, spilled out under cross-examination.
Mr. Jarrell said at different times in rapid, clipped tones, "I don't know what you are talking about" or "I don't know, you'd have to ask traders."
Mr. Jarrell testified that Mr. Rajaratnam's pattern of stock trading was consistent with information circulating in the market and that any insider tips were irrelevant. The prosecutor challenged some of his conclusions, repeatedly trying to show the jury that Mr. Rajaratnam had gained an unfair advantage over the market.