A jury just found hedge-fund billionaire Raj Rajaratnam guilty in a major insider-trading case. He faces 15 to 20 years in prison. Here's full coverage from the AP, the NYT and the WSJ.
Rajaratnam was convicted largely on the basis of damning wiretaps, where he said things like:
I heard yesterday from somebody who's on the board of Goldman Sachs that they are going to lose $2 per share. The Street has them making $2.50. (source: WSJ.)
A former director of Goldman has been charged with civil violations by the SEC in connection with the case, the FT notes. He's denied wrongdoing. For more on the wiretaps, see this post from NPR's The Two-Way.
More wiretaps — and insider trading cases — are probably on the way, according to one securities lawyer:
It will justify [the federal prosecutor] to call for more wire taps that will then be issued by the courts quicker. Wall Street has in essence been put on notice that prosecutors are going to be baiting more hooks, trying to pull more fish out of the water and have more success doing that. (source: Reuters)
Several of Rajaratnam's colleagues pleaded guilty — then testified against Rajaratnam, adding to the evidence against him.
Adam Smith, a former Galleon trader, testified at the trial that the New York-based hedge fund gained its advantage through other means. Rajaratnam emphasized "getting the number" — or learning revenue figures before they became public — from insiders at Intel Corp., Intersil Corp. and other publicly traded companies, he said.
"Research is sort of doing your homework ahead of time," Smith testified after pleading guilty to insider trading and agreeing to cooperate with prosecutors. "Getting the number is more like cheating on the test." (source: Bloomberg News)
In all, he made $64 million from insider trading, according to the government. That includes profits gained and losses averted. Via the FT, here's a list of the companies whose stock he profited on, and how much he made: