A federal jury on Wednesday convicted [press release, PDF] Galleon Group hedge fund founder Raj Rajaratnam on all 14 counts of insider trading. The jury in the US District Court for the Southern District of New York [official website] found that Rajaratnam orchestrated the largest hedge fund insider trading case in US history, finding him guilty of five counts of conspiracy to commit securities fraud and nine counts of securities fraud. US Attorney Preet Bharara said:
The message today is clearthere are rules and there are laws, and they apply to everyone, no matter who you are or how much money you have. Unlawful insider trading should be offensive to everyone who believes in, and relies on, the market. It cheats the ordinary investor, victimizes the companies whose information is stolen, and is an affront not only to the fairness of the market, but the rule of law. In just over 18 months, this office has charged 47 individuals with insider trading crimes; Rajaratnam is the 35th person to be convicted. We will continue to pursue and prosecute those who believe they are both above the law and too smart to get caught.Rajaratnam faces a maximum sentence of 205 years in prison. Sentencing is scheduled for July 29. His lawyer plans to appeal [Bloomberg report].
Several other defendants have pleaded guilty in connection with the case. Danielle Chiesi pleaded guilty [JURIST report] in January. Former IBM [corporate website] senior vice president Robert Moffat was sentenced to six months in prison in September and ordered him to pay a $50,000 fine for his role in the scheme after pleading guilty [JURIST reports] in March 2010. Former Intel Capital [corporate website] executive Rajiv Goel pleaded guilty [JURIST report] to insider trading charges in February 2010. Rajaratnam, Chiesi, Goel and Moffat were arrested in October 2009 and charged [complaint, PDF] along with two other individuals and two business entities with insider trading. The complaint alleged that the individuals provided Galleon Group and another hedge fund with material nonpublic information about several corporations upon which the funds traded, generating $25 million in illicit gain. Rajaratnam and Chiesi originally pleaded not guilty [JURIST report] in December 2009 after being indicted for insider trading.