The lawyer for Raj Rajaratnam on Thursday asserted that the insider trading case against the Galleon Group founder was a 'conspiracy' because his client had made profits only through public information and conducting the 'best research' in the business.Both the prosecution and defence made opening statements on the second day of the trial involving the Sri Lankan-born billionaire who faces charges of 14 counts of security fraud and conspiracy.
If convicted, he faces up to 20 years in prison.
"The information gathered by Raj was available to anyone who worked hard," John Dowd, a former military lawyer, told the jury on Thursday.
"Talking to corporate executives is what Raj did for a living."
"The evidence will show that Raj did not cheat," he added.
But federal prosecutor Jonathan Streeter said that Raj had made his money through 'greed and corruption.'
The central question of the case is whether Rajaratnam earned $45 million by using leaked confidential information.
The prosecution will use evidence collected through authorised wiretapping of phone conversations.
"He knew tomorrow's business news today and traded on it," Streeter said, adding that Rajaratnam didn't know that the Federal Bureau of Investigation was listening.
Rajaratnam, dressed in a grey suit, sat quietly with his team of lawyers as the lengthy opening statements were delivered in front of a packed court in Manhattan.
A second overflow room had to be opened up for journalists.
The prosecution told the jury about alleged insider trading deals with Adam Smith, a Galleon portfolio manager, and Rajat K Gupta, a former board member of Goldman Sachs and Proctor & Gamble, who was charged last week by the Securities and Exchange Commission for sharing confidential information with Rajaratnam.
So far, 19 people have pleaded guilty in the case, including Rajiv Goel, a former Intel executive, Anil Kumar, a former director at McKinsey & Co and Smith.
The 53-year-old business tycoon, however, denies any wrongdoing.
Besides his client's professional life, Dowd also talked about Rajaratnam's personal life such as his wife, three children and his loyalty to friends as well as former classmates at Wharton Business School from where he graduated at the top of his class in 1983.
The
lawyer stressed that his friends, who have pleaded guilty and ratted on Rajaratnam, had used his generosity and were now trying to 'save their own skin.'
Dowd said that these witnesses, who had pleaded guilty but not yet been sentenced, were being held on 'leash' by government prosecutors.
Last year, 51-year-old Kumar, the former director at McKinsey, pleaded guilty to receiving $1 million to provide secret information to Rajaratnam from 2003 to 2009, including a tip off on the acquisition of ATI Technologies Inc. by Advanced Micro Devices Inc.
Prosecutors allege Rajaratnam made USD 19 million in illegal profits from the ATI tip off but Dowd said on Thuesday that news of ADM acquiring ATI was already public.
Dowd said that Kumar had hidden from McKinsey the money he received from Rajaratnam for above-board consultations, and that Kumar was guilty of tax evasion from the IRS for five years. Dowd said that Kumar was now trying to pin his client and 'get a free pass from the government."
Goel also pleaded guilty, last year, for sharing earnings of Intel between 2007 and 2009, and admitted that Rajaratnam helped him sort out personal financial needs.
Dowd said that his client had helped Goel monetarily including giving him $500,000 when his father was unwell.
But the lawyer again insisted that Rajaratnam had not received any information from him that could be viewed as insider trading.
The case is being heard by a jury of seven women and five men, above the age of 40, who belong to diverse backgrounds including a government worker, nurse and teacher.
Dowd told the jury that the case is 'complicated' but the key question was whether the alleged confidential information was already available to the public.
Before the jury left today, the judge asked them not to discuss the case, and not to watch or read any news on Rajaratnam.
Image: Raj Rajaratnam
