On October 13, Judge Richard Holwell will pass down a sentence for convicted insider trader, Raj Rajaratnam. If the prosecution has its way, the Galleon Group founder will go away for twenty-four years. Obviously, the defense would prefer a little less time and in August, following Raj’s brother’s unsuccessful appeal for people to send character letters to the judge asking for lenience, turned to Plan B: breaking the news that Raj is suffering from a disease the likes of which you can’t even imagine, noting in a court filing that he will die from “unique constellation of ailments ravaging his body” if given anything even approaching twenty years. This, clearly, was well-played. Continue reading »
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We May Soon Find Out What The “Unique Constellation Of Ailments Ravaging” Raj Rajaratnam’s Body Are, Specifically
By Bess LevinFederal Judge Wants to Keep an Eye on SEC to Make Sure They’re Not Bullying Rajat Gupta
By Matt Levine
You might think – particularly if you’re a certain hedge fund manager counting down the days to a September sentencing – that Rajat Gupta did pretty well by not being prosecuted criminally (yet!) for allegedly passing inside information to Galleon. All he’s got so far is an SEC administrative action looking for “disgorgement of ill-gotten gains” and other civil penalties – which, not great, but better than jail.
But then again, not great – and Gupta ran McKinsey so you’d better believe he’s looking for ways to optimize the process. First up: get out of SEC administrative “court” and into a real court.
Continue reading »
It is implausible that every one of Rajaratnam’s sophisticated investors were in the dark. Yet the law says that, unlike the Madoff investors, they bear no responsibility for ignoring red flags. On the contrary: They are being rewarded for looking the other way…The phrase I find myself muttering a lot these days is: “There oughta be a law.”…The more I think about it, the more I’m convinced that there ought to be a law that says that if a fund manager’s “edge” is insider trading, his investors should have to pay a price, too. Maybe then, they’d be less willing to look the other way when their fund manager starts doing things he shouldn’t. [NYT]
Raj Rajaratnam’s Brother Wants People To Send Letters To The Judge About His Character
By Bess Levin
He requested their help last week and even included some links on the proper formatting to use when drafting missives in an attempt to convince a judge to be lenient in sentencing.
From: Rengan Rajaratnam
Sent: Tuesday, May 18, 2011Dear Friends,
I want to thank you for your support. Your calls, emails, texts, and inquiries are constant reminders that through this dark, tragic time, Raj and the family are not alone.
As we prepare for the appeals process, we need your help and I am I only sending this letter to a handful of people. The sentencing phase is coming up relatively quickly and the federal guidelines are calling for 15 to 19 years in jail. The guidelines are harder and less flexible than many prison sentences for violent and predatory offenders. This is simply unfair, and we are praying for leniency from the judge while we prepare for the appeal.
In the meantime, on behalf of Raj and the family, I would like to enlist your support one last time. Positive character letters from family, friends, and colleagues that know Raj well can play a pivotal role in helping persuade the Hon. Judge Holwell to be fair, and lenient during Raj’s sentencing.
If you’ve been closely following the government’s Insider Trading Fest(ivus) 2010/2011 you know that one thing that’s emerged is a detailed guide to how one should go about destroyed evidence of securities violations that a jury would not look upon kindly. Garrett Bauer spoke to us at length about the benefits of washing versus burning dirty money while Donald Longueuil, the foremost expert on the matter, provided a step-by-step guide to getting rid of incriminating USB drives (you’ll need: two pairs of pliers, four plastic baggies, one North Face fleece). Yesterday, an (alleged) accomplice of (accused) insider trader/former Galleon employee Zvi Goffer added a chapter on getting rid of a cell phone that could cause trouble. Continue reading »
Empirical Creative was paid about $300,000, the people familiar with the situation say, for services that included a mock trial, during which his lawyers employed two main defense themes: that the information prosecutors said involved illegal inside tips was already public, and that the government’s witnesses weren’t credible. During the mock trial, the consultants discovered, the jurors most receptive to those themes were those without advanced-education degrees or financial sophistication and with relatively low- to middle-income jobs. Mock jurors who were members of ethnic minority groups also were more sympathetic to Mr. Rajaratnam, who was born in Sri Lanka, their research found, according to the people familiar with the situation. The real jury reflected those findings in many respects. [WSJ]
Gorman
So you’ve started a hedge fund and have decided the best way to maximize returns for investors is by trading on material non-public information. With the government’s crackdown on insider trading, odds are you will ultimately get caught and, if you’ve suffered blunt trauma to the head, will decide to take your chances at a trial by jury rather than settle. If you’d like some level of assurance you’ll have better odds than Raj Rajaratnam, who was deemed guilty by Day 2 of deliberations (despite the jury taking 12 days to spit it out), consider these tips from one of the women, Leila Gonzalez Gorman, who helped sent him away. Continue reading »
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