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USA - Trial begins in biggest US insider trading case

Pak_Sher

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Dec 14, 2010
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NEW YORK: The trial of former hedge fund billionaire Raj Rajaratnam in the biggest insider trading case in US history has got underway with the process of jury selection in a New York court.

Sri Lankan-born Rajaratnam, 53, co-founder of the Galleon hedge fund is accused of making $45 million through illegal stock tips. One of his alleged tipsters is Rajat Gupta, former Indian-American director of Goldman Sachs.

Gupta is not an accused in the case. But last week, US regulator Securities and Exchange Commission's Enforcement Division alleged that Gupta fed Rajaratnam inside information about earnings at Goldman Sachs and Procter & Gamble when he was a board member at those companies.

In addition he is also alleged to have leaked details of a $5 billion investment in Goldman from Warren Buffett's Berkshire Hathaway minutes before it was announced in September 2008.

The federal prosecutor described the case as "the largest hedge fund insider trading case in history" and the biggest insider trading case since the 1980s.

Prosecutors allege Rajaratnam and 25 others swapped confidential corporate secrets on many well known companies, including the likes of Google. IBM, eBay, Intel and Goldman Sachs. Rajaratnam, who is free on $100 million bail, claims he is not guilty.

On the opening day of the trial in Manhattan's Southern District court Tuesday, Judge Richard Holwell oversaw the slow process of whittling down a pool of more than 100 potential jurors to 12 plus alternates.

In a 15-page questionnaire, Holwell probed jurors' opinions on everything from ethnic Indians and South Asians to Wall Street hedge funds.

Holwell said the marathon trial would feature "a lot of evidence with a lot of big money attached to it", but cautioned that "this case does not have anything to do with the recession or whether anyone is to blame for the recession. This case concerns only the specific charges that have been made against Mr Rajaratnam."

Rajaratnam is likely to face up to 25 years in prison if convicted on all 14 counts. Technically, the judge could decide to run the sentences consecutively, resulting in a term adding up to no less than 205 years.

He could also face $100 million in fines on transactions that occurred between 2003 and 2009.


Trial begins in biggest US insider trading case - The Times of India
 
No news, no trials on huge trading of airline stocks (United and American) just before 911? Even the names of people involved were never released....I wonder why?
 
Shame he got caught when USA do mass genocide in Bhopal they get away scot free the irony dont you just love it
 
Raj Rajaratnam was the founder of the Galleon Group, a former hedge fund. He is the central figure in the government’s sprawling, multiyear investigation into insider trading on Wall Street.

On Oct. 16, 2009, he was arrested at his Manhattan home, charged with running the biggest insider trading scheme involving a hedge fund. He and five others are accused by the Justice Department and the Securities and Exchange Commission of relying on a vast network of company insiders and consultants to make more than $20 million in profit from 2006 to 2009.

Mr. Rajaratnam, who is free on $100 million bail, is fighting the charges and is expected to go on trial on March 8, 2011. Over the last 18 months, federal prosecutors in Manhattan have charged 46 people with insider trading; of those, 29 have pleaded guilty.

In early March, the Securities and Exchange Commission accused a former director of Goldman Sachs and Procter & Gamble of passing illegal tips about those companies to Mr. Rajaratnam. The former director, Rajat K. Gupta, is accused of passing along information on the two companies’ earnings as well as word of Warren E. Buffett’s $5 billion investment in Goldman Sachs in 2008.

As a longtime senior executive at McKinsey & Company, Mr. Gupta is the most prominent business executive ensnared by the government in the wide-ranging investigation. He ran McKinsey from 1994 to 2003 and counts as friends and associates some of the most powerful people in business.

The S.E.C. filing contends that Mr. Gupta provided details about Goldman’s financial health and plans after the collapse of Lehman Brothers rocked the financial markets. On Sept. 23, 2008, the Goldman board met via telephone to consider and approve Mr. Buffett’s $5 billion purchase of preferred shares in Goldman.

“Immediately after disconnecting from the board call, Gupta called Rajaratnam from the same line,” the S.E.C. filing said. A minute later, Galleon funds bought more than more than 175,000 shares of Goldman just minutes before the market closed, the agency said.

After the close, Goldman announced the investment, and its shares rallied on the vote of confidence by Mr. Buffett. The Galleon funds netted a profit of more than $900,000, the S.E.C. says.

Raj Rajaratnam - The New York Times
 

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