Judge denies Rajaratnam’s bid to toss conviction

Thursday, 18 August 2011 00:10 - - {{hitsCtrl.values.hits}}

Judge upholds all 14 counts against Raj Rajaratnam
Rajaratnam was convicted in May
Sentencing set for Sept. 27

NEW YORK (Reuters): Galleon Group hedge fund founder Raj Rajaratnam has lost a bid to have his conviction thrown out after he was found guilty on insider trading charges in May.

U.S. District Court Judge Richard Holwell on Tuesday denied Rajaratnam’s renewed attempt for a judgment of acquittal on his conviction by a Manhattan federal jury on five counts of conspiracy to commit securities fraud and nine counts of securities fraud.

The one-time billionaire was at the centre of the government’s biggest insider trading investigation in decades that has resulted in charges against 50 individuals.

A spokeswoman for Rajaratnam’s defence team had no comment on the ruling.

Lawyers for Rajaratnam challenged the sufficiency of the evidence presented at trial against him. For example, they argued that prosecutors had not provided enough proof that Rajaratnam conspired to trade on the basis of inside tips he received from Rajat Gupta, who was a member of the board of directors of Goldman Sachs Group Inc (GS.N).

At trial, the government presented evidence that Gupta tipped Rajaratnam about Berkshire Hathaway Inc’s (BRKa.N) agreement to invest $5 billion in Goldman during the financial crisis and the investment bank’s intention to announce losses for the third quarter of 2008.

Holwell ruled that “the jury had evidence several times over to find Rajaratnam guilty beyond a reasonable doubt” on that count.

In a 48-page opinion, Holwell detailed reasons that the other counts should not be thrown out.

Holwell is expected to sentence Rajaratnam on 27 September.

Federal prosecutors accused Rajaratnam of trading on inside information from corporate executives, traders, and others, resulting in $63.8 million of illegal profit.

In a court filing last week, prosecutors asked for a sentence of between roughly 19-1/2 and 24-1/2 years, calling Rajaratnam “arguably the most egregious violator” of insider trading laws ever to be caught.

Lawyers for Rajaratnam argued for a sentence “substantially below” what the U.S. guidelines recommend, citing his failing health and his public works.

Holwell is not obligated to follow the guidelines when he delivers his sentence. The case is USA v Raj Rajaratnam et al, case No. 09-01184.