Jury shown two faces of Rajaratnam in closing words
Raj Rajaratnam wanted to conquer the stock market at the expense of the law, a U.S. prosecutor said in closing arguments of the hedge fund manager's insider trading trial on Wednesday.
But a lawyer for the Galleon Group founder countered in his summation that the government's narrow view is very unfair and Rajaratnam acted legally in seeking out information about investments on behalf of his customers.
As the six-week trial wound toward a conclusion, the voice of Rajaratnam rumbled repeatedly over speakers in a New York courtroom as prosecutor Reed Brodsky replayed excerpts of FBI phone taps to remind the jury that the defendant timed his stock trades, sometimes seconds after learning corporate secrets.
You heard the defendant committing his crimes time and time again in his own words, Brodsky told the jury in 4-1/2 hours of summing up the government's evidence that Rajaratnam made an illicit $63.8 million between 2003 and March 2009.
He said the case, built in part on trial testimony from three cooperating witnesses, demonstrated overwhelming and devastating evidence of Rajaratnam's guilt in the government's biggest probe of insider trading at hedge funds.
In contrast, chief defense lawyer John Dowd said the testimony from these witnesses was unreliable and worthless. Dowd also said the government failed to make its case.
The government's case rests on the fictional idea that company information cannot become public until a company issues a press release, Dowd said.
He also told the jury, In the real world information can become public in all kinds of ways. If it's public, you must acquit.
Rajaratnam, a 53-year-old one-time billionaire, is the central figure in the sweeping U.S. government probe of insider trading at hedge funds, and the only defendant so far to go on trial. If convicted, he could face up to 25 years in prison.
To convict, the government must convince jurors beyond a reasonable doubt that Rajaratnam received material nonpublic information from people who had a duty not to disclose it, and that he knew it was wrong to trade on it.
During Brodsky's animated presentation, he sometimes raised his voice to emphasize a point from a lectern directly in front of the jury box. Dowd used a more matter-of-fact tone, mostly reading from the lectern.
Both men referred to documents in evidence that were projected onto screens in the courtroom.
Dowd spoke for about one hour, and is expected to continue his closing statement on Thursday. The jury could start deliberations later that day or on Monday. Court is not expected to be in session on Friday, which is Good Friday.
GOLDMAN LEAKS
The Sri Lankan-born defendant faces securities fraud and conspiracy charges relating to secrets about earnings or acquisition activity involving more than a dozen companies such as chipmakers Advanced Micro Devices Inc
Brodsky said Rajaratnam tried to cover up illegal trades with email trails and patterns of buying and selling stocks.
The defendant's insider trading scheme helped him pad his profits that kept him at the top in a game to be the best, and conquer the stock market at the expense of the law, Brodsky told the 12 jurors and four alternates.
Rajaratnam sat expressionless, surrounded by at least 10 lawyers and a few friends.
Brodsky said Rajaratnam orchestrated several conspiracies to get tips, including one involving Rajat Gupta, a former worldwide managing director at consultancy McKinsey & Co who also sat on the board of Goldman Sachs Group Inc
Recalling trial testimony from Goldman Chief Executive Lloyd Blankfein, Brodsky said Gupta repeatedly told Rajaratnam about the Wall Street bank's private board discussions.
Within seconds of hearing great news from Gupta in September 2008, which turned out to be a critical $5 billion investment in Goldman by Warren Buffett's Berkshire Hathaway Inc
Then, that October, he learned from Gupta that Goldman would suffer its first quarterly loss as a public company, Brodsky said, and Rajaratnam sold his Goldman stake first thing the next morning. The loss became public in December.
There's no other rational explanation for the timing of the calls, the timing of the trades, Brodsky said. Those calls say it all.
Brodsky also reminded jurors of the testimony of witnesses who admitted conspiring with Rajaratnam and Dowd responded by attacking their credibility. These witnesses included former McKinsey partner Anil Kumar, former Intel Corp executive Rajiv Goel and former Galleon portfolio manager Adam Smith.
Dowd said Kumar, Goel and Smith testified because they were coerced by the government and wanted to get sweetheart deals when they are sentenced after pleading guilty to criminal charges.
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 and Tim Dobbyn)
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