What a shock. Raj is guilty.
When you’ve got a trove of incriminating wiretaps and enough plea-copping associates of the defendant to populate a couple of baseball teams, it isn’t a surprise that a New York jury would convict the billionaire co-founder of the hedge fund Galleon Group LLC.
On Wednesday, a jury said Raj Rajaratnam was guilty of 14 counts of conspiracy and securities fraud in an insider trading trial that lasted two months. He faces 15 ½ to 19 ½ years in prison when he is sentenced July 29, though his potty-mouthed lawyer, John Dowd, said he intends to appeal.
So the government got its bad guy. The cooperating witnesses are steering the Feds to more cheaters. Hedge fund guys are dusting off their “How To Pick Stocks Without Using Inside Information” textbooks from their days in business school. All in all, good news, I suppose, but the even better news is that the Rajaratnam show is over. Here are 10 reasons you should be glad:
No. 10. We can all drop the pretense that we’d ever heard of Galleon. Come on, tell the truth. Unless you work in finance, had you ever heard of Rajaratnam or his New York-based fund? At least Ivan Boesky was famous for that outrageous “greed is healthy” speech to students at the University of California at Berkeley.
No. 9. Speaking of Boesky, be grateful for this: we’ve picked up another big insider-trading crook to add to our repertoire of white-collar-crime small talk for cocktail parties. Like Ivan himself, the Boesky story long ago had grown whiskers.
No. 8. Bernie Madoff won’t be the only big Wall Street fish in the pokey. This will benefit society in many ways, not the least of which will be that reporters who didn’t get a chance to land the initial jailhouse interviews with Madoff will have a shot at redeeming themselves with a tell-all session with Rajaratnam.
No. 7. Rajaratnam’s lawyer will have time for anger- management class. Dowd, 69, looked a little unseemly in a CNBC video just after the trial when a cameraman asked if he had anything to say, and responded “Get the (f-bomb) out of here, that’s what I’ve got for CNBC.”
No. 6. Rajaratnam could flee from house arrest at his apartment on New York’s swanky Sutton Place, setting off a manhunt that might offer a lot more intrigue than the trial.
No. 5. It will help the economy. Reporters will be booking flights, renting cars, and staying in hotels, as they tool around the country to visit prisons for the predictable stories about the amenities available at federal prisons, speculating over which one might turn out to be Rajaratnam’s new home. Securities lawyers will drum up business from hedge funds terrified of getting caught doing what Rajaratnam did. New York City and Greenwich, Connecticut, restaurants will boom as hedge fund guys meet in person to swap tips lest their phones be tapped.
No. 4. Wharton can add another case study of an alum gone bad when it teaches students how to know when they’re shifting from ethical dilemma to flat-out criminality. Already, the school counts Michael Milken and two of Rajaratnam’s college pals who pleaded guilty among its graduates.
No. 3. Judge Richard J. Holwell, who presided over the trial, showed real promise for a lucrative new career in securities arbitration, where meetings are secret and documents are confidential. Holwell ushered lawyers out of the courtroom for sidebar meetings, sealed transcripts of private sidebars, and admonished the jury to keep its deliberations secret.
No. 2. Wall Street brass can begin the healing process from the trial’s big ego jolt. Only eight jurors had even heard of the billionaire defendant when the judge interviewed a room of 40 potential jurors. None had ever heard of Lloyd Blankfein, head of Goldman Sachs Group Inc., but then again, the judge didn’t even know how to pronounce Blankfein’s last name.
No 1. Best of all, maybe prosecutors will have time now to pursue all those less important criminals who almost destroyed the economy a couple years ago. Yeah, we’ve heard the spiel: the cases are too difficult, the insider traders deserve attention because they threaten the integrity of the markets, and making lousy bets with other people’s money isn’t a crime. But I’m holding out hope that maybe a prosecutor will get an indictment or two against the cheaters who caused your Aunt Matilda to relocate from her cute house with the window boxes to a one-room dump in the senior citizen housing project.
Really, isn’t it time that some big-bank bosses got the kind of voicemail from the feds that Rajaratnam did? “See you in court.”
(Susan Antilla is a Bloomberg News columnist. The opinions expressed are her own.)
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