Thursday, 28 July 2016
Last updated 9 min ago
Mar 7 2011 | 12:47pm ET
Raj Rajaratnam plans to testify in his own defense at his insider-trading trial, which begins tomorrow.
The Galleon Group founder has told people close to him that he will take the stand, The Wall Street Journal reports. Whether or not he actually does remains to be seen; a decision is likely to be based on how incriminating the taped phone conversations the prosecution plans to use are.
If Rajaratnam does take the stand, it will be the marquee moment in one of the biggest insider-trading trials in U.S. history—no small feat, given that Goldman Sachs CEO Lloyd Blankfein has agreed to testify in the case. The trial, in Manhattan federal court, is expected to last six-to-eight weeks.
After jury selection and opening statements, prosecutors are to begin their case against Rajaratnam with Federal Bureau of Investigation special agent Diane Wehner as their first witness. Wehner will be followed on the stand by former McKinsey & Co. partner Anil Kumar, a cooperating witness who pleaded guilty last year to providing confidential information to Rajaratnam about Advanced Micro Devices.
Much of the pre-trial parrying had to do with another McKinsey veteran, Rajat Gupta. At a hearing Friday, Assistant U.S. Attorney Jonathan Streeter said that the former head of the consulting giant is a co-conspirator in the case, although Gupta has not been criminally charged.
Streeter made the same allegation against Rajaratnam's brother Rengan, who ran hedge fund Sedna Capital Management. Rengan Rajaratnam has also not been charged criminally, and unlike Gupta, he has not been sued by the Securities and Exchange Commission.
"Mr. Gupta is a conspirator with Mr. Rajaratnam to share insider information about Goldman," Street said.
"The government intends to submit evidence that there is such a conspiracy. The government is going to show that on at least two occasions, Mr. Gupta attended Goldman Sachs board meetings and within literally minutes of attending those meetings, he called Mr. Rajaratnam."
Streeter's arguments won over U.S. District Judge Richard Holwell, who is presiding over the trial. Holwell rejected a defense objection to prosecutors' use of taped conversations between Rajaratnam and Gupta, as well as between the Rajaratnma brothers.
Rajaratnam's lawyers have called the SEC lawsuit against Gupta a "smear campaign," and Gupta's lawyer, Gary Naftalis, has said that his client "has done nothing wrong and is confident that these unfounded allegations will be rejected by any fair and impartial fact-finder."
But Streeter said that the day after learning from Gupta about an impending investment in Goldman by Berkshire Hathaway, he told employees in taped conversation that he "got good new about Goldman." Later that year, he said on another taped conversation that "he was told by a board member at Goldman Sachs that Goldman Sachs was losing," prompting him to sell off Galleon's entire stake in the bank.