Following a two-week deliberation by the New York jury assigned to the securities fraud litigation trial, Raj Rajaratnam was found guilty in federal court in Manhattan of 14 counts related to conspiracy and securities fraud.
Rajaratnam, 53, is reported to be the billionaire founder of Galleon Group. An investigation by the SEC and FBI resulted in allegations of insider trading and securities fraud to the tune of about $17 million in illegal profits. The Feds have essentially put Wall Street on notice in recent months, suggesting that traders using illicit means to earn profits would not be tolerated, regardless of who is involved or the size of profits at stake.
The Rajaratnam case was described by CNN Money as the most high-profile stock fraud case in about 10 years.
Investigators used wiretaps and other means to land their prey. To that end, Rajaratnam was alleged to have made trades using inside information from various co-conspirators—one of whom was identified as Rajat Gupta, a former member of the Board at Goldman Sachs. Prosecutors claimed that Gupta, rather than keep pivotal information in the boardroom, leaked it to Rajaratnam.
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Rajaratnam's defense counsel argued that his client acquired and was acting on information not at all central to investment decisions according to the "Mosaic Theory." The jury in the stocks and securities lawsuit disagreed.
According to a release by States News Service dated May 11, the Rajaratnam case is the largest such securities fraud case in US history. Investigators accused Rajaratnam of pursuing and acting upon insider information over a six-year period from 2003 to 2009.
The defendant was convicted on five counts of conspiracy and nine counts of securities fraud. He faces fines up to $5 million and up to 20 years in prison when he is sentenced in July. Defense counsel has signaled that Rajaratnam will appeal the conviction.