A hedge-fund billionaire who soon will face a jury wants to know whether people hate Wall Street. Of course they do, and no wonder:
A money manager stands charged with threatening to kill regulators.
Attorneys collecting money for victims of Bernard Madoff accuse hedge-fund honchos of knowingly profiting from his Ponzi scheme. Citibank, HSBC Holdings and Bank of America’s Merrill Lynch unit knew or should have known Madoff was a crook, say the lawyers, led by trustee Irving Picard. JPMorgan Chase “aided and abetted” the scheme, they say in a lawsuit the bank calls “meritless.” The other companies deny complicity, too.
In bankruptcy court, all sorts of creditors, including other banks, are suing Lehman Brothers Holdings, claiming it cheated them out of millions of dollars. Lehman says it’s the victim, not the perp.
And every few days, yet another financial whiz or business expert pleads guilty to insider trading.
Meantime, Wall Street geniuses whose reckless greed and unregulated schemes sent the country into an economic tailspin take home million-dollar bonuses while Americans lose their jobs and their homes because of the crisis.
So it’s easy to understand why Raj Rajaratnam might have trouble finding 12 sentient adults who don’t have a sour view of him and his kind. The co-founder of Galleon Group LLC heads to trial in Manhattan on Feb. 28, charged with insider trading.
Here’s one of the questions his lawyers want to ask potential jurors: “Do today’s Wall Street executives lack integrity?”
Are they kidding? Do they really want to know the depth and breadth of public distrust of Wall Street?
To try to keep that sort of bias out of the jury box, this week they proposed to the judge a 15-page questionnaire for prospective jurors that contain questions such as, “How honest do you think Wall Street executives are?” Answers would be given on a five-point scale, from “not at all honest” to “extremely honest.”
They probably aren’t going to like what they find.
An NBC-Wall Street Journal poll last May found that 58 percent of Americans believe “corporate corruption and broker practices” make markets unfair. A mere 35 percent believed “the stock market is a fair and open way to invest one’s money.”
I’m surprised trust in Wall Street was even that high.
There may have been worse times for an accused white-collar criminal to come to trial, like after the 2001 and 2002 collapses of Enron, WorldCom and the rest. But this isn’t a great time either.
It won’t be possible for Rajaratnam’s lawyers to insulate the jury box from that kind of sentiment. Even would-be jurors who admit harboring “strong” negative views about Wall Street, as the questionnaire puts it, wouldn’t be automatically eliminated.
The test is whether they can set those views aside to base a verdict strictly on the evidence at trial. Few people will admit that they can’t be fair. But when judges are convinced that would-be jurors are too biased, they can kick them out of the pool for cause.
On the other hand, when a judge declines to excuse an iffy panelist, it falls to the lawyers to decide what to do. The defense can boot such a person out by using one of the 10 “peremptory” strikes. If the jury pool contains more than 10 jurors whose views worry the defense, lawyers will have to choose which ones concern them most.
(Prosecutors get six such challenges. They’ll be hunting for people too sympathetic to Wall Street.)
When former Enron chief executives Jeffrey Skilling and Kenneth Lay stood trial in Houston, the hometown of the company’s rise and demise, their lawyers tried to weed out potential jurors who displayed the sort of anti-Enron sentiment that seemed to pervade the city.
One said she had lost $50,000 to $60,000 on Enron, but the judge kept her in the pool until a defense lawyer removed her.
During argument over Skilling’s appeal last year, U.S. Supreme Court Justice Stephen Breyer said he counted anywhere from three to six potential jurors who admitted bias, yet the judge didn’t dismiss them from the pool and often didn’t sufficiently question them.
Still, the high court ruled 6-3 that pre-trial prejudice wasn’t grounds for reversing Skilling’s conviction. (Breyer was one of the three dissenters.)
Bear Stearns Case
At any rate, prosecutors can’t rely on juror prejudice to carry their case. Some jurors who acquitted two Bear Stearns hedge-fund managers in 2009 said afterwards that that’s exactly what prosecutors were attempting, and they didn’t much like it.
The defendants, Ralph Cioffi and Matthew Tannin, “were scapegoats for Wall Street” juror Serphaine Stimpson said afterwards.
When the Rajaratnam trial opens, both sides will try to seat a jury favorably predisposed to their claims. Given the times, and the long list of Wall Streeters gone bad, that will be harder for the defense than for prosecutors.
Ann Woolner is a Bloomberg News columnist. The opinions expressed are her own.)
To contact the writer of this column: Ann Woolner in Atlanta at email@example.com
To contact the editor responsible for this column: James Greiff at firstname.lastname@example.org