Wall Street insider trading trial picks jury
NEW YORK – The trial of former hedge fund tycoon Raj Rajaratnam began Tuesday in New York with the painstaking selection of a jury in a case prosecutors see as an example of Wall Street corruption and greed.
Sri Lankan-born Rajaratnam, 53, used insider information at his Galleon Group fund to earn himself at least $45 million, prosecutors said after an investigation making extensive use of wiretaps.
Rajaratnam, who is free on $100 million bail, claims he is not guilty.
In federal court, he remained silent, standing once in his dark suit and white shirt to turn and nod as he was introduced to the pool of more than 100 potential jurors.
Media reports say Rajaratnam could take the highly unusual move of testifying in his own defense, rather than let his legal team do all the talking in a trial expected to hear testimony from a Who’s Who of Wall Street figures — including Goldman Sachs head Lloyd Blankfein.
On the opening day of the trial, Judge Richard Holwell oversaw the slow process of whittling down the juror pool to 12 plus alternates.
There were gasps from around the courtroom when Holwell warned that the trial could run two and a half months.
Then, in a 15-page questionnaire, Holwell probed jurors’ opinions on everything from ethnic Indians and South Asians to Wall Street hedge funds.
After a vicious recession that saw millions of people make substantial losses on the stock market, there is widespread popular mistrust of Wall Street and the troubled US financial sector.
“As we all know, a lot of people on Wall Street make a lot of money. And you will hear evidence about multi-million transactions,” Holwell said. “Does anyone think that evidence about wealthy individuals and multi-million dollar transactions will make it difficult for you to decide the case fairly?”
He said the marathon trial would feature “a lot of evidence with a lot of big money attached to it.”
But Holwell cautioned that “this case does not have anything to do with the recession or whether anyone is to blame for the recession. This case concerns only the specific charges that have been made against Mr Rajaratnam.”
Rajaratnam is likely to face up to 25 years in prison if convicted on all 14 counts. Technically, the judge could decide to run the sentences consecutively, resulting in a term adding up to no less than 205 years.
He could also face $100 million in fines on transactions that occurred between 2003 and 2009.
The federal prosecutor in New York described the case as “the largest hedge fund insider trading case in history” and the biggest insider trading case since the 1980s, media reports say.
Rajaratnam’s Galleon Group managed $3.7 billion in funds before his arrest in late 2009. He was ranked by Forbes magazine in that year as the 559th wealthiest person in the world, with an estimated $1.3 billion.
Rajaratnam ordered Galleon wound down after his arrest and has said that his former clients lost little money.
Prosecutors have brought conspiracy and securities fraud charges alleging that Rajaratnam used confidential information to profit from trades involving public companies, including Hilton, Google, Clearwire and Akamai.