Hedge-fund Tycoon, Rajaratnam convicted Counts of Conspiracy & Securities Fraud

Hedge-fund tycoon and Galleon Group cofounder at the centre of a US insider-trading crackdown, Raj Rajaratnam was found guilty of all 14 counts against him in the largest illegal stock-tipping case in a generation. Rajaratnam used inside information to trade ahead of public announcements about earnings, forecasts, mergers and spinoffs involving more than a dozen companies, according to the evidence at the trial.

The eight-member jury in Manhattan returned its verdict on 11 May 2011 after hearing evidence that Rajaratnam was engaged in a seven-year conspiracy to trade on inside information from corporate executives, bankers, consultants, traders and directors of public companies including Goldman Sachs Group.

Rajaratnam was convicted on five counts of conspiracy and nine counts of securities fraud. Conspiracy carries a maximum sentence of five years while securities fraud can bring 20 years in prison. After the verdict, Rajaratnam was allowed to remain free on bail with electronic monitoring pending sentencing.

Galleon was among the 10 largest hedge funds in the world in the early years of the last decade. It managed $7 billion at its peak in 2008. Rajaratnam’s net worth of $1.3 billion made him the 559th richest person in the world. Prior to his arrest on 16 October 2009, Rajaratnam had claimed that Galleon analysts had an advantage over rivals because most were trained as engineers and all focused their energies exclusively on research. At the trial, his lawyers claimed that his trades were based on Galleon research.