The government secretly recorded Rajaratnam talking to his tipsters, and it used those conversations to show the jury a dark side of the hedge-fund business that was long suspected. Prosecutors also drew upon testimony of co-conspirators whom the government had turned against Rajaratnam.
Rajaratnam, 53, head of Galleon Management, was accused of illegally reaping profits or avoiding losses of about $64 million.
The investment mogul did not testify in his own defense. His legal team argued that he traded on legitimate investment analysis and information in the public domain.
The trial was one of the most widely followed Wall Street cases in years. But it had little to do with the biggest Wall Street scandal in decades: the crisis in the mortgage and financial markets that plunged the nation into a devastating recession.
Lawmakers, activist groups and some financial analysts have questioned why the Obama administration has not brought any major criminal charges against a prominent Wall Street executive involved in the debacle. Congress has summoned top federal investigators over the past year to explain. The Financial Crisis Inquiry Commission, a special Senate investigative panel, and the Securities and Exchange Commission have referred cases to the Justice Department for possible prosecution.
Although many people have been hungering for financial titans to be held criminally accountable for the damage, Columbia Law School professor John C. Coffee Jr. said Wednesday that the government must be embarrassed that not a single high-ranking Wall Street executive has been indicted in connection with the crisis.
Coffee noted that the Rajaratnam investigation began before the crisis, and he said it was an important case for the Justice Department to pursue.
But in an earlier interview, he suggested that the current campaign against insider trading, which the Rajaratnam case symbolizes, offered an element of consolation. “If you aren’t able to bring the cases that probably the public expects, you may want to compensate,” he said.
Anthony Michael Sabino, a professor at St. John’s University in New York, put it this way: “This doesn’t make up entirely for Bernie Madoff, the mortgage crisis and a host of other wrongs, but it’s a start.”
Justice officials have said they are guided by the law and the evidence rather than public passions. “We have and we will continue to investigate aggressively all forms of financial crimes and when we find evidence to prove a crime has been committed, we will not hesitate to charge it,” Justice spokeswoman Alisa Finelli said.