Trial begins in biggest US insider trading case
The trial of former hedge fund billionaire Raj Rajaratnam in the biggest insider trading case in US history has got underway with the process of jury selection in a New York court.business Updated: Mar 09, 2011 18:03 IST
The trial of former hedge fund billionaire Raj Rajaratnam in the biggest insider trading case in US history has got underway with the process of jury selection in a New York court.
Sri Lankan-born Rajaratnam, 53, co-founder of the Galleon hedge fund is accused of making $45 million through illegal stock tips. One of his alleged tipsters is Rajat Gupta, former Indian-American director of Goldman Sachs.
Gupta is not an accused in the case. But last week, US regulator Securities and Exchange Commission's Enforcement Division alleged that Gupta fed Rajaratnam inside information about earnings at Goldman Sachs and Procter & Gamble when he was a board member at those companies.
In addition he is also alleged to have leaked details of a $5 billion investment in Goldman from Warren Buffett's Berkshire Hathaway minutes before it was announced in September 2008.
The federal prosecutor described the case as "the largest hedge fund insider trading case in history" and the biggest insider trading case since the 1980s.
Prosecutors allege Rajaratnam and 25 others swapped confidential corporate secrets on many well known companies, including the likes of Google. IBM, eBay, Intel and Goldman Sachs. Rajaratnam, who is free on $100 million bail, claims he is not guilty.
On the opening day of the trial in Manhattan's Southern District court on Tuesday, Judge Richard Holwell oversaw the slow process of whittling down a pool of more than 100 potential jurors to 12 plus alternates.
In a 15-page questionnaire, Holwell probed jurors' opinions on everything from ethnic Indians and South Asians to Wall Street hedge funds.
Holwell said the marathon trial would feature "a lot of evidence with a lot of big money attached to it", but 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.