Rajaratnam guilty on all 14 insider counts
- Rajaratnam faces a maximum sentence of more than 19 years.
A New York jury Wednesday found one-time billionaire hedge fund founder Raj Rajaratnam guilty on all 14 counts of using inside information to make tens of millions of dollars illegally.
Prosecutors said in Manhattan federal court that Rajaratnam, co-founder of the Galleon Group, used a network of friends and old college buddies to cheat on Wall Street.
The jury found him guilty on five counts of conspiracy and nine counts of securities fraud. It had been deliberating since April 25.
His lawyers had argued that he only traded based on public information.
Rajaratnam, 53, was arrested in October 2009 in the largest campaign against insider trading involving hedge funds in U.S. history.
Tips yielded $63.8M
Wiretaps of the Rajaratnam's phone calls suggested he gained $63.8 million from tips from corporate insiders and hedge-fund traders.
Prosecutors suggested his Galleon Group funds became a multibillion-dollar success at the expense of ordinary stock investors who didn't have advance notice of the earnings of public companies and of mergers and acquisitions.
Prosecutors said Rajaratnam faces a maximum term of more than 19 years in prison.
U.S. Attorney Preet Bharara said the verdict sends a message that white collar laws apply to everyone, "no matter how much money you have."
The defendant "was among the best and the brightest, one of the most educated, successful and privileged professionals in the country," Bharara said in a statement. "Yet, like so many others, he let greed and corruption cause his undoing."
Outside court, with Rajaratnam at his side, defense attorney John Dowd said there will be an appeal.
Authorities said the 45 tapes used in the case represented the most extensive use to date of wiretaps — common in organized crimes and drug cases — in a white-collar case.
Sentencing was set for July 29.
"You heard the defendant commit his crimes time and time again in his own words," Assistant U.S. Attorney Reed Brodsky said in closing arguments.
"The tapes show he didn't believe the rules applied to him," the prosecutor added. "Cheating became part of his business model."
The defense argued that the tapes revealed nothing more than that Rajaratnam was doing his duty by asking questions about information already circulating in the "real world" of high finance.
"That happens every day on Wall Street," Dowd had suggested. "There's nothing wrong with it."
The Galleon probe has resulted in more than two dozen arrests and 21 guilty pleas. It also led to a second investigation aimed at consultants in the securities industry who pass off inside information as the product of legitimate research.
With files from The Associated Press