Rajaratnam has infected foot, absent as jury meets

Wednesday, 4 May 2011 00:15 - - {{hitsCtrl.values.hits}}

NEW YORK: Hedge fund founder Raj Rajaratnam did not appear in court on Monday on the sixth day of jury deliberations in his insider trading trial after undergoing emergency foot surgery, his lawyer said.

“Rajaratnam had developed a bacterial infection in his foot that required surgery,” lawyer John Dowd said in a statement on Monday. “It is hoped that he will be recovered sufficiently to return to the courthouse this week.”

Dowd said Rajaratnam, 53, had the surgery on Sunday, and that presiding US District Judge Richard Holwell had approved the Galleon Group founder’s absence.

Rajaratnam, who has been free on bail since his October 2009 arrest, had attended every day of the trial that began on 8 March.

The prosecution is the biggest involving alleged insider trading on Wall Street in two decades.

It is the centrepiece of a broad federal investigation into improper trading involving hedge funds that has resulted in more than three dozen arrests.

“Given the importance of what is riding on this trial, it is highly unusual” for the defendant to be absent, said C. Evan Stewart, a partner at Zuckerman Spaeder LLP in New York who is not involved in the case.

“The defendant is in a position to waive certain rights he may have to be physically present when the jury comes back with a verdict,” he added. “That’s why the judge will make very clear what the protocol will be, so no one can object that the defendant did not knowingly and freely agree to it.”

A spokeswoman for US Attorney Preet Bharara in Manhattan declined to comment on Rajaratnam’s absence.

If the jury does not reach a verdict on Monday, it is expected to resume deliberations on Wednesday. Holwell cited “juror scheduling issues” for giving the panel Tuesday off, in a note to jurors that was made publicly available.

Prosecutors have accused the Sri Lankan-born Rajaratnam of reaping as much as $ 63.8 million illegally by trading on inside tips about companies such as chipmaker Advanced Micro Devices Inc and Goldman Sachs Group Inc.

Rajaratnam faces nine counts of securities fraud and five counts of conspiracy. If convicted, he could face up to 25 years in prison.

While the jury continued deliberations, prosecutors and Rajaratnam’s lawyers met the judge behind closed doors for more than one hour. The jury also sent a note to Holwell but its contents were not made public.

During the trial, prosecutors introduced more than 40 recordings of phone taps that they said showed Rajaratnam receiving and planning trades on inside information.

A verdict essentially hinges on whether the government has convinced jurors beyond a reasonable doubt that Rajaratnam traded on material nonpublic information from people who had a duty not to disclose it, and knew it was wrong.

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