Tuesday, 30 August 2016
Last updated 19 hours ago
Jul 9 2014 | 9:30am ET
The younger brother of Galleon Group founder Raj Rajaratnam will not suffer the same fate as his brother, after a jury acquitted him of insider-trading yesterday.
It took the jury just four hours to break an 81-conviction winning streak built up by federal prosecutors in New York over the past five years, and clear Rengan Rajaratnam of the single count remaining against him: conspiring with his brother to illegally trade shares of a technology company.
In many ways, the government’s crackdown on insider-trading began and ended with the younger Rajaratnam: It was a tip about him in 2007 that got the probe started in earnest and that wound up netting the convictions of his brother and 80 others since October 2009. But prosecutors’ case against Rengan Rajaratnam was always somewhat thin. Initially slapped with seven counts of fraud and conspiracy when he was arrested in 2013, Rajaratnam saw the case against him dwindle as prosecutors—prodded by U.S. District Judge Naomi Reice Buchwald—dropped four of the counts before the trial even began. Buchwald herself tossed the remaining fraud charges after prosecutors closed their case.
Prosecutors spent much of their time building a case against Raj Rajaratnam, who is serving an 11-year prison sentence, hoping jurors would draw a line between the brothers. The strategy may have backfired, with one juror telling Reuters, “We felt like a lot of the trial was about Raj. We were waiting to hear more about Rengan, who was the actual person on trial. By the end, we were all like, ‘Where’s the evidence?’”
Another told The Wall Street Journal, “I think there was an element of retrying Raj Rajaratnam instead of Rengan.” The juror, literary agent Miriam Goderich, called the evidence “so underwhelming that you couldn’t convict.” The forewoman, history professor Isabel Tirado, was just as blunt: “There was no evidence, period.”
U.S. Attorney Preet Bharara said he was “disappointed with the verdict.”
Rengan Rajaratnam, who worked with his brother at Galleon both before and after starting his own hedge fund, Sedna Capital Management, returned to the U.S. from Brazil to face the charges. After he was acquitted, Buchwald told him he can now return for the World Cup finals, scheduled for Sunday.
“Absolutely,” Rajaratnam, who still faces a Securities and Exchange Commission lawsuit, said.