May 23, 2024

DealBook: Closing the Galleon Case

Closing arguments have begun in the insider trading case against Raj Rajaratnam, the billionaire co-founder of the Galleon Group hedge fund. DealBook spoke to some former prosecutors who have been watching the case, and their consensus is that the weight of evidence does not bode well for the defendant.

Richard L. Scheff, chairman of the Philadelphia-based law firm Montgomery, McCracken, Walker Rhoads, said that the prosecution needed to keep the focus on the details of transactions in its closing arguments.

Mr. Scheff also said that he found it “astounding” that the defense team did not disclose to the jury that a hedge fund formed by one of its key witnesses, Richard Schutte — a former president of Galleon Group — received more than $25 million in investments from Mr. Rajaratnam. That detail came out during cross-examination by the prosecution, and represented a potentially serious tactical error by Mr. Rajaratnam’s defense team.

Elliott H. Lutzker, a lawyer at the Manhattan firm Davidoff Malito Hutcher, noted that the prosecution “absolutely” established that Mr. Rajaratnam had access to “material, nonpublic information” — which forms the legal basis for any successful insider trading case.

The jury could begin deliberating as early as Thursday.

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