As the Raj Rajaratnam insider trading trial draws to a close, we started to think about which pieces of evidence really made the Galleon chief look bad in front of the jury.
Certainly, the most incriminating evidence comes from government wiretaps, because the defence cannot dispute the actual words that came out of their client’s mouth.
Also, while witness testimony is not empirical, it can nonetheless be equally as damning to the defendant if it strikes a cord with jurors.
In a recorded phone call Chiesi tells Raj that Akamai will lower its earnings guidance, a few days before the information goes public. She urges Raj to act before the announcement. After the phone call, Raj increases his short position on the stock from 300,000 to 875,000 shares.
Raj then calls her after the announcement and says: 'I just wanted to say thank you.' News of the reduced projections sent the stock tumbling more than 25%.
The defence says: Anyone could see that Akami would reduce its earnings guidance 'based on the competitive pressures it faced,' and that was discussed in analyst reports.
In a wiretapped call from 2008 Raj calls a Galleon managing director, Krish Panu, after one of his friend's revealed details about a deal involving tech company, Spansion.
Raj then says: 'The best way to do these things, is to say...'I sent an email to you saying... Have you guys thought of Spansion? Stock looks cheap right?... And you send by saying, 'I'll get Langly to do some work or something like that. You know?'
The defence says: There's no other evidence to support that Raj traded on this information.
After a board conference call about Berkshire Hathaway's $5 billion investment in Goldman, Rajat Gupta calls Raj less than a minute later. Raj then places an order for $43 million worth of Goldman stock minutes before trading closes that day. He makes $1 million profit when Goldman stock surges after Buffett stake is revealed.
The really damning part -- Raj tells one of his employees, Ian Horowitz on a wiretapped call: 'So, big drama yesterday... I got a call at 3:58, right? Saying something good might happen to Goldman.'
The defence says: There's no evidence that Gupta revealed that information on the call, and there was media speculation about Goldman getting a huge cash injection from the government in the form of TARP.
After the call from Gupta, Raj told one of his Galleon managers he just got a tip about Goldman losses
In the wiretap Raj relays news of Goldman's yet-to-be-announced quarterly losses to another Galleon manager. The day before, Goldman called a board meeting because for first time ever, the bank was down for the quarter but consensus on Wall Street was that the bank would report a profit.
'I heard yesterday from somebody who's on the board of Goldman Sachs that they are going to lose $2 per share,' Raj says to his manager. 'The Street has them making $2.50.'
The defence says: There was other negative media about Goldman, including layoff news and losses in a Chinese investment that led Raj to make liquidate stock.
Kumar testified that he told Raj details about 'super confidential' negotiations between AMD and ATI in 2006. Kumar said Raj was amazed when he told him AMD was willing to pay more than $20 a share for ATI.
Kumar testified: 'Mr. Rajaratnam just said, 'This is completely ridiculous, it makes no sense. … Are you absolutely sure?' I said yes. He said, 'Wow, this is really useful.''
After the deal was announced, Kumar said that Raj said to him: 'We're all cheering you right now. … He said something like, 'You're a star, or you're a hero.'
The defence says: The information Kumar says he passed on was already already public in the media.
Raj was furious after he was left in the dark about a secret deal involving Intel, according to Rajiv Goel
Raj instructed an employee to establish a record to make investments look legit, according to Adam Smith
Raj's brother Rengan flipped out because the WSJ published a story on a deal on which the brothers wanted to trade
In one wiretap Raj's little brother Rengan loses it when the WSJ publishes a story on a deal before Rengan knows whether or not his brother purchased stock.
Rengan says, 'Oh dude, we're f**ked... It just hit the Wall Street Journal.' Raj says, 'What's that?' Rengan says, 'the Clearwire stuff.. It's all over the Wall Street Journal... So I don't know how much you got in today, but, I think... is gonna rip tomorrow' -- implying that the brothers already knew about the deal.
The day before, Galleon had bought 125,800 Clearwire shares. The government says Raj bought shares based on tips from Rajiv Goel. Two days after the purchase -- one day after the WSJ story -- Clearwire's stock surged and Raj made a ton of cash.
The defence says: There was a significant amount of public speculation about the joint venture, and Intel's investment in it, both by press and financial analysts.
Anil Kumar testified that in 2009 Raj received a call on his cell while they were vacationing in Miami. Raj answered his cell, walked down the beach, talked for about 10 minutes and when he came back, told Kumar he'd just gotten a call from a Cisco exec that Cisco is buying a company called Starent.
On the same trip, Kumar alleges that Raj said to him, from now on, 'When you call me, you should use pre-paid cell phones.'
The defence says: Raj traded on publicly available information, and that Kumar is trying to get a reduced sentence.
Smith testified that he'd thrown out a notebook and his personal laptop on the day Raj was arrested. One week later, Smith says Raj asked him to 'take care of' a fax that contained 'sensitive information' so he tossed it as well, which makes it appear that Raj was trying to hide something.
The defence says: Smith is trying to secure a lesser sentence.
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