December 6, 2023

DealBook: Prosecutors Describe ‘Devastating Proof’ of Rajaratnam’s Guilt

Raj Rajaratnam, right, and his lawyer, John Dowd.Spencer Platt/Getty Images Raj Rajaratnam, right, and his lawyer, John Dowd.

A prosecutor accused Raj Rajaratnam in court on Wednesday of conspiring with a network of friends and employees to gain access to sensitive information and earn millions of dollars in illegal profits from insider trading.

As the government began closing arguments in Mr. Rajaratnam’s trial, a prosecutor, Reed Brodsky, laid out what he described as “devastating proof of the defendant’s guilt.”

Mr. Rajaratnam engaged in “a game to be the best in a highly competitive industry and conquer the stock market at the expense of the law and the average, ordinary investor.”

Mr. Brodsky wasted little time before trumpeting what he called “the most powerful evidence of defendant’s guilt — his own voice.” The government has played more than 40 secretly recorded telephone conversations between Mr. Rajaratnam and his supposed accomplices during the trial.

“The tapes provided devastating evidence of defendant’s crime in real time,” said Mr. Brodsky, standing behind a lectern positioned directly in front of the 12 jurors and 4 alternates.

“Let’s go to the tape,” said Mr. Brodsky, echoing Warner Wolf, the New York sports announcer.

The Galleon networkAzam Ahmed and Guilbert Gates/The New York Times Click on the above graphic to get a visual overview of the Galleon information network.

During the first two hours of closing the government replayed several audiotapes of Mr. Rajaratnam swapping confidential information with tipsters. Mr. Brodsky told the jury that he would not be able to play all of the recorded conversations, but encouraged them to listen to as many of them as they wanted to during their deliberations.

“So yesterday they agreed on, at least they’ve shaken hands,” said Anil Kumar, a former McKinsey Company executive who has pleaded guilty, on one of the tapes played Wednesday. “Um, so I think you can now just buy.”

Mr. Brodsky struck a confident tone during closing. He told the jury that he would not be able to review all of the evidence related to Mr. Rajaratnam’s scheme “or else we’d be here for days.” He challenged Mr. Rajaratnam’s defense lawyers to explain away certain incriminating statements made by their client. He mocked the defense’s argument that Mr. Rajaratnam only traded on news articles, analyst reports and news releases.

“Absurd,” he said.

The government’s closing argument is expected to consume most of Wednesday’s court session. The defense will follow with its closing argument, and the government then gets the final word in rebuttal. The jury could get the case as soon as Thursday.

Mr. Brodsky, a clean-cut Matthew Broderick-type dressed in a dark suit, white shirt and repp tie, appealed to the working-class New York jury by repeatedly contrasting Mr. Rajaratnam, a billionaire, with the “average, ordinary investor.”

“The defendant knew tomorrow’s news today, and that mean big money,” Mr. Brodsky said. It was information “the average, ordinary investor didn’t know and couldn’t find out.”

As it did during the trial, the government also focused on evidence of Mr. Rajaratnam scheming to cover up his supposed crimes. Mr. Brodsky posted a transcript of Mr. Rajaratnam coaching colleagues on how to create an “e-mail trail” to make it appear that he was buying stock for legitimate reasons. He showed the jury a conversation during which Mr. Rajaratnam discussed confidential information with another fund manager and then instructed her to “buy and sell, and buy and sell” to create a flurry of trading activity around establishing a stock position to make it more difficult to detect insider trading.

Mr. Brodsky also preemptively addressed several of Mr. Rajaratnam’s defenses. After taking the jury through a series of trades that Mr. Rajaratnam made in October 2008 based on inside information from Mr. Kumar about Advanced Micro Devices, Mr. Brodsky acknowledged that Mr. Rajaratnam lost money on these tips, despite their accuracy.

“The reason why the defendant lost money is the same reason why millions of investors lost money,” Mr. Brodsky said. “A.M.D. announced the deal at the time of one of greatest financial collapses in American history. You don’t need to make money in order to be guilty of the crime of insider trading.”

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