Tuesday, 16 September 2014
Last updated 11 hours ago
Mar 10 2011 | 12:57pm ET
The lawyers in the Raj Rajaratnam insider-trading case squared off yesterday, offering the newly-empanelled jury their takes on the evidence that jurors began to hear today.
Assistant U.S. Attorney Jonathan Streeter opened the festivities yesterday afternoon with a stinging indictment of the Galleon Group founder, saying he engaged in insider-trading "again and again and again" between 2003 and his arrest in late 2009.
The prosecutor focused on the thousands of wiretaps at the heart of the government's case, citing one in which he allegedly told employees, "I heard yesterday from somebody who's on the board of Goldman Sachs that they're going to lose $2 a share." That tip, Streeter said, helped Galleon avoid millions in losses.
Rajaratnam "exploited a corrupt network of people" to get the information that made the New York-based firm a success, he said.
"The evidence will show that at Galleon, people did their homework but the cheated, too," Street said. "At Galleon, people did legitimate research, but they cheated, too, and that cheating is called insider trading."
The prosecutor added that Rajaratnam showed that he knew what he was doing was wrong when he directed his co-conspirators to "trade stocks in a way that would hide" their allegedly illegal activity.
"Greed and corruption: That's what this case is all about," Streeter said.
Not so, Rajaratnam's lead defense attorney countered: It's about a gullible prosecutor's office putting stock in the word of people lying "to save their own skins."
"The evidence will show the government has it wrong," John Dowd said. "And the government has it wrong because it believed the word of unbelievable people."
Dowd took issue, stock by stock, of the more than two dozens companies in whose shares Rajaratnam is alleged to have illegally traded. And he blasted key prosecution witnesses, such as former McKinsey & Co. partner Anil Kumar, set to be the government's second witness.
Dowd even took aim at former Rajaratnam co-defendant Danielle Chiesi, who pleaded guilty earlier this year but is not cooperating with the investigation.
Chiesi, who worked at hedge fund New Castle Partners, was all "talk, gossip and exaggeration" who was trying to "impress others and insinuate herself."
Rajaratnam, by contrast, is a hard-working immigrant who came to his success honestly.
"The information Raj gathered was available to anyone willing to work hard," Dowd claimed. Galleon's team "would analyze a company's published statements and regulatory filings," as well as media reports.
"Talking to corporate executives is what Raj did for a living," he said. "It's what investors hired him to do."
"The evidence will show that Raj did not cheat," Dowd said.
In their openings, prosecutors also had what appears to be more bad news for McKinsey: A third former employee of the consulting giant involved in the case, in addition to Kumar and former McKinsey chief Rajat Gupta.
The newest McKinsey consultant was not named, but Streeter said that, on a taped phone call, Rajaratnam and one of his brothers spoke "about plotting to get inside information from a consultant at McKinsey" that Rajaratnam described as "dirty." Among the suggestions in the call was offering the McKinsey consultant's wife a job at Galleon.
The trial continues today, with prosecutors calling their first witness, expected to be Federal Bureau of Investigation Special Agent Diane Wehner.
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