Hedge fund founder convicted of insider trading

A former Wall Street titan was convicted Wednesday of making a fortune by coaxing a crew of corporate tipsters into giving him an illegal edge on blockbuster trades in technology and other stocks — what prosecutors called the largest insider trading case ever involving hedge funds.

Raj Rajaratnam was convicted of five conspiracy counts and nine securities fraud charges at the closely watched trial in federal court in Manhattan.

The jury had deliberated since April 25, and at one point was forced to start over again when one juror dropped out due to illness.

Prosecutors had alleged the 53-year-old Rajaratnam made profits and avoided losses totalling more than US$60 million from illegal tips.

His Galleon Group funds, they said, became a multibillion-dollar success at the expense of ordinary stock investors who didn't have advance notice of the earnings of public companies and of mergers and acquisitions.

On Wednesday, Rajaratnam sat at the defence table, a rarity for him at the trial, and stayed motionless as the verdict was read. He will remain free on bail, though now with electronic monitoring, at least until his July 29 sentencing.

Prosecutors said Rajaratnam faces a maximum term of more than 19 years in prison.

US Attorney Preet Bharara said the verdict sends a message that white-collar laws apply to everyone, "no matter how much money you have".

Outside court, with Rajaratnam at his side, defence attorney John Dowd said there will be an appeal filed with the 2nd US Circuit Court of Appeals.

Of the 37 trades that the government sought to prosecute, he added, only 14 made it to trial.

- AP