Why Wasn't Case Against Rengan Rajaratnam Dropped?

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July 8 (Bloomberg) -- Bloomberg's Keri Geiger and Sheelah Kolhatkar discuss the U.S. sanctions violations against Commerzbank and the acquittal of Rengan Rajaratnam with Pimm Fox on "Taking Stock." (Source: Bloomberg)

Great to have you both here.

I do not know where to start.

These are the stories that keep on giving.

Let us start by talking about the bank.

They are going to be hit by a fine like bnp paribas?

$500 million.

Bnp paribas last week eight almost $9 billion for a similar sanctions violation.

This is going to be the 22nd bank over the last few years paying fines.

Some have pleaded guilty.

Some have signed deferred prosecution agreements.

Some have just settled, paying relatively large fines to clear up violations of u.s. sanctions.

Any idea how much they are going to get?

About half $1 billion.

Significantly smaller than bnp paribas.

What were they guilty of?

The same kind of thing?

Cuba, iran, sudan.

Those are usually the main issues.

The u.s. government has a lot of reach into foreign banks, since they passed the patriot act in 2002. european banks that have any u.s. dollars clearing for operations in the u.s. are really vulnerable to this if they are violating the sanctions, which is why we have seen close to two dozen of these sanctions in the last few years.

You touch u.s. dollars, you have to pay attention to u.s. law.

Do not violate sanctions.

Seems like a good plan to follow.

This trial, rengan rajaratnam, brother of raj rajaratnam, former head of gallium.

What is he charged with?

Conspiracy to commit securities fraud.

This was the incredible shrinking case.

The government charged him on seven counts of engaging in securities fraud and conspiracy charges over the recent months.

The judge made it clear she did not think very highly of some of the government evidence.

The case just got whittled down.

Just last week, she dealt another blow to the prosecutors and throughout two of the security charges.

Alternately this morning, a jury started deliberating over one conspiracy charge, the weakest charge, the maximum penalty of a five-year prison charge, although no one expected he would have gotten that much.

The jury came back in a few hours, a short time.

Almost, you wasted our time with this trial.

They acquitted him.

This is a big loss for the u.s. attorney's office in manhattan, which has had this perfect run of convictions and guilty pleas.

You mentioned the judge taking a position on some of the charges previous to today's acquittal, right?

That being the case, why wouldn't the prosecutors just drop the case, or negotiate the case?

Was that not even on the table?

This was never really an important case in terms of the amount of money involved.

The trade that ultimately was charged was a money losing trade.

It is possible to insider trade in lose money, especially in 2008. it is really sad when that happens.

In 2008, the market was very crazy, if you recall.

It is the financial crisis.

Even people placing sure bets on company earnings were losing money, because the market was behaving unpredictably.

Is this a case where the law enforcement people said, roche roger rotman has a brother.

He must be implicated.

We are going to go after him.

That is what his lawyers argued.

I think this case was symbolically important for the government.

He was roche roger rotman's brother.

He was the big fish, serving this 11 year prison sentence.

A lot of people involved in this investigation -- the fbi, the fcc -- have been looking at rengan since 2006. they did believe he was up to no good.

They brought this case.

They felt it was important.

It did not work out.

People are shocked that it did not end in a conviction.

Sheila mentioned the big fish.

Is there another big fish in the banking world to be mindful of?

All of the u.s. banks -- credit suisse -- who is left?

Bank of america and citibank are facing civil claims.

They could be close to $4 billion to $10 billion for citigroup.

7 billion dollars for bank of

This text has been automatically generated. It may not be 100% accurate.


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