Jury weighs Rajaratnam's fate in insider case
NEW YORK |
(Reuters) - A jury weighed Raj Rajaratnam's fate on Monday in Wall Street's biggest insider-trading trial in two decades, a case featuring FBI phone taps and longtime friends whose testimony could put the hedge fund manager behind bars.
Jurors deliberated for four hours in Manhattan federal court without reaching a verdict. Among the jurors are a nurse, a food services employee with New York City's board of education and a city transportation agency worker. Deliberations will resume on Tuesday.
Prosecutors accuse Rajaratnam, the founder of the Galleon Group hedge fund, of running a web of highly placed tipsters including hedge fund colleagues and corporate executives to make as much as $63.8 million illegally.
The defense has countered that Rajaratnam was a successful, aggressive money manager who used a wide array of research, analysis and public information to make his trading decisions.
Rajaratnam, 53, is charged with nine counts of securities fraud and five counts of conspiracy for trading on stocks such as chipmakers Advanced Micro Devices Inc and Intel Corp, Internet search company Google Inc and Wall Street bank Goldman Sachs Group Inc.
Jurors on Monday sent two notes to the judge. One asked for defense exhibits related to Clearwire Corp, which in May 2008 entered a wireless network venture with Sprint Nextel Corp, backed by a $1 billion Intel investment.
Former Intel managing director Rajiv Goel, who pleaded guilty in the case, testified that he tipped Rajaratnam about the venture on March 19, 2008. Prosecutors said Rajaratnam bought 125,800 Clearwire shares five days later.
U.S. District Judge Richard Holwell said he would tell jurors they already had the exhibits in a binder in the jury room.
In another note, the panel asked for visual charts displayed in the courtroom during the prosecution's closing statements last week. Holwell said charts presented during the summations are not part of evidence during a trial, so the jury would be referred to other government exhibits.
BURDEN OF PROOF
Rajaratnam's October 2009 arrest was part of an investigation that prosecutors have described as the biggest probe of insider trading at hedge funds on record.
The attention given to the case is reminiscent of the big insider-trading scandal of the mid-1980s involving speculator Ivan Boesky and junk bond financier Michael Milken.
At Rajaratnam's trial, more than 40 recordings of wiretapped conversations were played for jurors. The trial has lasted nearly seven weeks.
In his jury instructions, Holwell told jurors to consider the covert recordings in their deliberations, "whether you approve or disapprove" of them.
Jurors have not been told that Rajaratnam, a one-time billionaire, last year fought unsuccessfully to suppress the wiretaps.
Holwell also reminded jurors that "the defendant is never required to prove that he is not guilty."
Rajaratnam stared mostly straight ahead as Holwell spoke.
Jurors must be unanimous for a guilty verdict on any count. Rajaratnam could face up to 25 years in prison if convicted of securities fraud and conspiracy.
'HAS TO BE TRUE'
In the broad Galleon case, 20 out of 26 executives, traders and lawyers charged have pleaded guilty to criminal charges.
Rajaratnam's trial began on March 8, and he is the only defendant in the probe to go to trial so far. A trial of four other defendants is scheduled to start on May 16.
Earlier on Monday, with a frowning Rajaratnam looking on, a prosecutor finished his rebuttal to last week's defense summation by John Dowd, Rajaratnam's lead lawyer.
Referring to defense arguments that those who testified against Rajaratnam lied, Assistant U.S. Attorney Jonathan Streeter told jurors that there was so much corroborating evidence that the trial testimony "has to be true."
"People don't come in and admit elaborate crimes that they did not commit," Streeter said.
In his closing statement last week, Dowd said there were multiple instances where his client had taken a position in a stock before the recorded conversation.
There were other times, he said, "when Raj didn't trade at all, and when he traded in the opposite direction of what was communicated on the calls."
The case is USA v Raj Rajaratnam et al, U.S. District Court for the Southern District of New York, No. 09-01184.
(Reporting by Grant McCool and Jonathan Stempel. Editing by Matthew Lewis, Robert MacMillanand Bernard Orr)
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