‘Rajaratnam’s trades based on available info’

PTI Updated - November 20, 2017 at 08:13 PM.

Trading pattern of Raj Rajaratnam, founder of Galleon Group, was consistent with information that was already available to investors before the hedge fund billionaire allegedly received inside information, a witness testifying on behalf of the defence told a court.

53-year-old Rajaratnam is on trial in the US for alleged insider trading. He is accused of gaining more than $63 million from insider tips.

Mr Gregg A. Jarrell, a professor of finance and economics at the University of Rochester, produced evidence to show that the content of the alleged tips that the defendant received was already available in the public domain.

For instance, Mr Jarrell showed that public information indicated that the stocks of Goldman Sachs Inc were likely to decline because the firm was being hit by the financial crisis in 2008.

“The theme that keeps getting reported here is that things are getting worse,” he said, referring to press and analyst reports from 2008.

The prosecution has alleged that Sri Lanka-born Rajaratnam sold the firm’s stock based on an alleged tip by Mr Rajiv Gupta, a former director at the investment bank, about the firm’s earnings in the fourth quarter of 2008.

Mr Lloyd Blankfein, CEO of Goldman Sachs, has testified that Mr Gupta violated the firm’s confidentiality policy.

The prosecution has also alleged that Mr Rajaratnam got an insider tip from Ms Danielle Chiesi, a hedge fund trader, that Akamai Technologies was going to “guide down’’, prompting the defendant to sell the company’s stock.

Mr Jarrell, however, said there were plenty of other indicators that Akamai was in trouble including it being listed on the Sell List of Goldman Sachs, which means that a company is in big trouble. “This is really bad,” he said.

Mr Jarrell showed slides, press clippings, and analyst reports to counter several insider trading allegations made by prosecution regarding Mr Rajaratnam’s trading patterns.

During the cross examination, the Manhattan Assistant US Attorney, Mr Jonathan Streeter, said there was plenty of public information that was contrary to the alleged tips.

Published on April 16, 2011 04:51