Rajaratnam broke law to conquer market - prosecutor

Thursday, 21 April 2011 00:00 - - {{hitsCtrl.values.hits}}

Reuters - Raj Rajaratnam took advantage of friends and employees to make millions of dollars of illegal profit from insider trading, a prosecutor said as the trial of the Galleon Group hedge fund founder neared its conclusion.

"The defendant knew tomorrow's news today, and that meant big money," Assistant U.S. Attorney Reed Brodsky told the Manhattan federal jury in his closing argument on Wednesday. As Rajaratnam sat expressionless Brodsky told jurors that the defendant tried to "conquer the stock market at the expense of the law," and that there was "overwhelming" evidence of his guilt, including from dozens of secretly recorded phone calls. "You heard the defendant committing his crimes time and time again in his own words," Brodsky told the jury, "scheming to cover his tracks."

"Corrupting his friends and his employees, he gained access to secret information to gain an advantage over ordinary investors in the stock market," Brodsky added.

Rajaratnam, 53, is the central figure in a sweeping U.S. government probe of insider trading at hedge funds, and the only defendant so far to go on trial.

The one-time billionaire was charged with 14 counts of securities fraud and conspiracy, and faces as much as 25 years in prison if convicted. His chief defense lawyer, John Dowd, is expected to begin his closing argument later on Wednesday. The jury could begin deliberations as soon as Thursday.

Prosecutors accuse Rajaratnam of making as much as $63.8 million of illegal profit from 2003 to March 2009 by trading on tips from a network of highly-placed corporate insiders.

Many of the tips related to technology companies such as chipmakers Advanced Micro Devices Inc and Intel Corp and the Internet search company Google Inc.

In a trial that began March 8, the government has played more than 40 secretly recorded phone conversations, some of which were replayed on Wednesday. Prosecutors have also called three of Rajaratnam's former friends to testify they conspired to help him profit from inside secrets. Rajaratnam's lawyers countered by showing jurors a slew of graphs, charts and other documents to demonstrate their client relied on public information and old-fashioned research to make trades.

In his summation, Brodsky focused on testimony of Anil Kumar, a former McKinsey & Co partner who said Rajaratnam paid him $1.75 million to provide tips, including on AMD's $5.4 billion takeover of chipmaker ATI Technologies Inc in 2006.

"Your common sense tells you the defendant's money corrupted Kumar," Brodsky told jurors. Kumar pleaded guilty to fraud and conspiracy and agreed to cooperate with prosecutors.

Preet Bharara, the U.S. attorney in Manhattan, sat in the courtroom as Brodsky summed up the government's case. Bharara has called insider trading on Wall Street "rampant."

The case is USA v Raj Rajaratnam et al, U.S. District Court for the Southern District of New York, No. 09-01184.