Thursday, 27 November 2014
Last updated 18 hours ago
Mar 22 2011 | 1:34pm ET
The insider-trading trial of Galleon Group founder Raj Rajaratnam resumed yesterday, with the jury hearing evidence of allegedly illegal trades in Intel Corp. and Hilton Worldwide shares.
Prosecutors played several taped phone calls between Raj Rajaratnam and former Intel executive Rajiv Goel, who has pleaded guilty and is cooperating with prosecutors. On the wiretaps, the two discuss a proposed 4G wireless Internet joint venture between Intel and Clearwire Corp. The two men talked about how much Intel might invest in such a business.
Some of those details were confidential, Intel executive Sriram Viswanathan testified. Viswanathan added that Goel, who worked in Intel's treasury group, would have had access to information about the deal.
Unsurprisingly, Rajaratnam's defense team took issue with both assertions, submitting into evidence a so-called "list of knowers" for the Clearwire deal that did not include Goel, and noting that the supposedly inside information was public knowledge, anyway.
"The press was following the developments in regards to Intel and Clearwire and reporting on them regularly," Terence Lyman said. "It was out there."
"These were public speculation, combined with a couple of facts," Viswanathan replied.
"The stock market doesn't sit around and wait for a public announcement," Lyman went on. "Money managers have to connect the dots, right?"
Prosecutors also sought to make clear that Goel, at least, thought what he was doing might be wrong. On one of the tapes, Goel tells Rajaratnam, who asked about Goel's laughing children, that his kids mock him when he spoke with Rajaratnam because "I talk so softly."
Earlier yesterday, prosecutors presented evidence that Rajaratnam turned a $4 million profit in one day by trading on inside information about Hilton's impending takeover by the Blackstone Group. Rajaratnam is said to have learned about it one day before the deal was announced from Roomy Khan, a former Galleon and Intel employee who allegedly heard about the deal from Moody's Investors Service analyst Deep Shah, the only fugitive in the Galleon case.
Moody's analyst Margaret Holloway testified that she told Shah about the deal on July 2, 2007; it was announced after the market closed on July 3. Holloway said Hilton's stock price "started to creep up" after she told Shah.
Prosecutors say Rajaratnam doubled Galleon's stake in Hilton on July 3, prior to the announcement.
But a Rajaratnam lawyer, Michael Starr, noted that Galleon had been gradually increasing its stake in Hilton before Khan is alleged to have given Rajaratnam the scoop on the Blackstone deal. He also pointed to six reports published that year pointing towards a Hilton sale.
Khan has pleaded guilty to insider-trading and is cooperating in the investigation.
Nov 4 2014 | 9:45am ET
Data management is important to every business, but for hedge funds, it is critical. FINalternatives recently asked Peter Sanchez, CEO of Northern Trust Hedge Fund Services, how fund managers can deal with the demands of managing data while at the same time remain transparent and abide by operational best practices. Read more…
Reg NMS created a huge bifurcation in equity markets and while much of what has followed has been positive, in terms of lower fees and greater liquidity, many traders would like to see the market come...