New York: US prosecutors opened the biggest hedge fund insider-trading trial ever saying prime accused Raj Rajaratnam 'cheated' to make millions of dollars from illegal insider tips but the businessman countered saying he made profits making use of only 'public information'.
Both the prosecution and defence made opening statements on the second day of the trial on Wednesday 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 prosecution said that 53-year-old Rajaratnam made his money through 'greed and corruption'.
"Greed and corruption. That's what this case is all about," prosecutor Jonathan Streeter told the federal jury in a packed Manhattan district court at the start of his opening statement. A second overflow room had to be opened up for journalists.
Streeter said the accused tapped ex-classmates and longtime friends at public companies for secrets to earn tens of millions of dollars in illegal profits.
Dressed in a grey suit, Rajaratnam remained still as Streeter described securities fraud crimes in stark terms, repeatedly pointing at the defendant, who founded the now defunct Galleon Group LLC family of hedge funds in 1997. He has denied any wrongdoing.
John Dowd, a former military lawyer who appeared for Rajaratnam, however asserted that the insider trading case against his client was a 'conspiracy' because he had made profits only through 'public information' and conducting the 'best research' in the business.
"The information gathered by Raj was available to anyone who worked hard," Dowd told the jury.
"Talking to corporate executives is what Raj did for a living."
"The evidence will show that Raj did not cheat," he said, adding that Rajaratnam spent 300 USD million annually at Galleon on research and called it the best in the business to the benefit of pension funds, wealthy individuals and hard-working citizens.
The central question of the case is whether Rajaratnam earned USD 45 million by using leaked confidential information.
The prosecution will use evidence collected through authorized 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 FBI was listening.