The millionaire investor was found guilty of insider trading on Wall Street

Raj Rajaratnam, the billionaire investor who once ran one of the world's largest hedge funds, was found guilty on Wednesday of fraud and conspiracy by a federal jury in Manhattan.

He is the most prominent figure convicted in the government's crackdown on insider trading on Wall Street.

Mr. Rajaratnam, who was convicted on all 14 counts, could face as much as 19 and a half years in prison under federal sentencing guidelines, prosecutors said on Wednesday. He is to be sentenced on July 29.

Mr. Rajaratnam, dressed in a black suit and a khaki green tie, had no expression as the verdict was read in the overflowing courtroom.

His lawyer, John Dowd, said he would appeal.

Prosecutors had asked that Mr. Rajaratnam be placed in custody, arguing that he was a flight risk. They said he had the means to leave the country, noting that he owned property in Sri Lanka and Singapore.

Judge Richard J. Holwell ordered home detention and electronic monitoring for Rajaratnam.

Someone who answered the phone at Rajaratnam's home and would only describe himself as a family friend expressed surprise at the verdict. Rajaratnam “was confident that nothing would happen,” he said

About a half-dozen jurors declined to comment as they left the courthouse.

B.J. Kang, the FBI special agent who led the investigation of Rajaratnam, said he was “happy for justice” outside the courthouse.

Preet Bharara, U.S. attorney for Manhattan, whose prosecutors brought the case against Rajaratnam, said: “The message today is clear, there are rules and there are laws, and they apply to everyone, no matter who you are or how much money you have.”

Mr. Bharara noted that over the last 18 months his office had charged 47 people with insider trading; Mr. Rajaratnam is the 35th to be convicted.

The government built its case against Mr. Rajaratnam with powerful wiretap evidence. Over a nine-month stretch in 2008, federal agents secretly recorded his telephone conversations. They listened in as Mr. Rajaratnam brazenly and matter-of-factly swapped inside stock tips with corporate insiders and fellow traders.

“I heard yesterday from somebody who's on the board of Goldman Sachs that they are going to lose $2 per share,” Mr. Rajaratnam said to one of his employees in advance of the bank's earnings announcement.

“One thing we know, this is very confidential, someone is going to put in a term sheet for Spansion,” he told a colleague, referring to a proposed acquisition of the technology company.

“So yesterday they agreed on, at least they've shaken hands,” a tipster told Mr. Rajaratnam about an upcoming deal involving another publicly traded business. “So I think, uh, you can now just buy.”

For years, Mr. Rajaratnam was lionised as one of Wall Street's savviest investors. At its peak, his Galleon Group hedge fund managed more than $7 billion in assets. Investment banks, including Goldman Sachs and Morgan Stanley, counted Galleon, which paid out roughly $300 million in trading commissions annually to brokerage firms, as one of their largest trading clients.

In the early morning hours of October 16, 2009, federal agents arrested Mr. Rajaratnam at his Sutton Place apartment on Manhattan's East Side. The government placed him at the centre of a vast insider trading conspiracy, accusing him of using a corrupt network of tipsters to earn tens of millions of dollars in illegal trading profits in stocks, including Google and Hilton Worldwide.

The case has led to insider trading charges against 25 defendants 21 of whom have pleaded guilty, including former executives at IBM, Intel and Bear Stearns. Mr. Rajaratnam fought the charges against him, insisting that he had done nothing wrong. His lead lawyer, Dowd, said his client's success as a money manager came from “shoe-leather research, diligence and hard work.” — New York Times News Service

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