Legal Commentary

Opening Arguments Begin For Galleon Group founder Raj Rajaratnam

By Jeralyn

In what is being called the largest insider trading trial in a generation, opening arguments in the trial of Galleon Group's Raj Rajartnam begin today.

Since arresting 53-year-old U.S. citizen Rajaratnam in October 2009 and announcing criminal charges against 26 former traders, executives and lawyers, the U.S. government has pressed ahead with what it calls the biggest probe of insider trading in the $1.9 trillion hedge fund industry. Nineteen people have pleaded guilty in the Galleon case.

There are wiretaps and cooperators galore. There will be a feast of corporate-leaked secrets. It will expose the hedge-fund industry.

Former Goldman Sachs Group director Rajat Gupta, who has not been criminally charged but had civil SEC charges brought against him last week, may play a prominent role. The feds have phone calls in which he allegedly provided Rajaratnam with confidential information from Goldman Sachs. [More...]

Chief defense lawyer John Dowd has argued in court papers that prosecutors have broadened the definition of insider trading. He said a money manager's liberty should not be at risk because he trades on a stock while knowing something about the company.

The Government must prove that Rajaratnam received information from a fiduciary who was not allowed to disclose it, and then traded based on the information.

A primer is here.

Full post as published by TalkLeft on March 09, 2011 (boomark / email).