Rajaratnam jury asks to hear call replays
By Grant McCool and Jonathan Stempel | April 27, 2011 4:14 AM EST
The jury in Raj Rajaratnam's insider trading trial asked to listen to replays of nine FBI phone taps of the hedge fund manager chatting and chuckling in conversations central to government allegations that he ran a web of informants to leak corporate secrets.
As the jury studied the evidence on its second day of deliberations, a former trader associated with Rajaratnam's Galleon Group became the latest to plead guilty in a sweeping government probe of insider trading on Wall Street.
Craig Drimal, who prosecutors said had an office on Galleon Group premises but was not an employee of the fund at the time of his November 2009 arrest, pleaded guilty to securities fraud and conspiracy. His hearing in Manhattan federal court took place four floors above a locked room where 12 jurors have weighed Rajaratnam's fate since Monday.
Prosecutors accuse Rajaratnam of making an illicit $63.8 million between 2003 and March 2009 using a network of highly-placed corporate insiders, including Rajat Gupta, a former director of Goldman Sachs Group Inc and former worldwide head of McKinsey & Co.
The jury assembled in the courtroom early Tuesday afternoon to listen to replays of phone taps between Rajaratnam and his brother, fellow Galleon trader Rengan Rajaratnam, and five former friends and associates. The calls are among more than 40 the jury heard during the trial, now in its eighth week.
Jurors took notes and looked closely at the phone tap transcripts that were projected onto screens in front of them as the recordings were played.
In one of the calls, Rajaratnam is heard talking and later laughing with a then-Intel Corp executive about a friend who got lost driving. That executive, Rajiv Goel, has pleaded guilty and was a key government witness against Rajaratnam at the trial.
In the broader Galleon case, 21 out of 26 people have pleaded guilty. Sri Lankan-born Rajaratnam, 53, is the only defendant to go on trial so far.
During the trial, defense lawyers presented evidence that Rajaratnam's trades were guided by public information, not leaks of corporate secrets by highly placed insiders as the prosecution contends.
DRIMAL REGRETS ACTIONS
Jurors must be unanimous for a guilty verdict on any of the 14 counts of securities fraud and conspiracy. If convicted, Rajaratnam would face a prison sentence of up to 25 years.
Rajaratnam's October 2009 arrest was part of an investigation that prosecutors described as the biggest probe of insider trading at hedge funds on record.
The attention given to the case is reminiscent of the big insider-trading scandal of the mid-1980s involving speculator Ivan Boesky and junk bond financier Michael Milken.
Rajaratnam and other suspects had been recorded on court-approved phone taps -- tactics traditionally used in probes of organized crime families, political corruption and drug trafficking.
Rajaratnam, Drimal and other defendants failed in their bids before separate judges to have wiretap evidence excluded on privacy and other grounds.
Drimal, 54, told U.S. District Judge Richard Sullivan that he traded in shares of computer network equipment maker 3Com Corp and Canadian drug company Axcan Pharma Inc, based on tips from lawyers working on merger transactions.
"At the time I did these trades," Drimal said, "I believed my conduct was illegal and wrong, and I deeply regret these actions that have caused such pain for my family and friends."
Drimal had been scheduled to go on trial with three others on May 16. He is free on bail until sentencing on September 9. The government has suggested a prison term of up to seven years.
His lawyer, JaneAnne Murray, declined to comment.
(Reporting by Grant McCool, Jonathan Stempel and Basil Katz; Editing by Tim Dobbyn and Gerald E. McCormick)
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