Yesterday during the trial of Raj Rajaratnam for insider trading, Raj’s defence lawyers filed for acquittal.
Filing for acquittal as soon as the prosecution rests is normal in a trial like this.
Lawyers for the defence will sometimes file just so that they can announce in front of the jury, “The prosecution has proved nothing. Naturally, we move to acquit immediately.”
In Raj’s case, filing for acquittal “is an absolute joke,” according to our editor.
It usually doesn’t work. And in Raj’s case, acquittal seems especially unlikely.
Right now, most people think that Raj will be convicted of insider trading (we took a poll two weeks ago; it was about 3:1 in favour of a conviction). We’ve also heard some people say that Raj will be convicted, but he could win an appeal of the decision. Apparently the judge left a door open for the defence to appeal in the case of a conviction by saying that, in order to obtain wiretaps of Raj’s conversations, the prosecution made “glaring omissions” in its application for a search warrant.
What is interesting about the acquittal isn’t that the defence filed one; it’s what they said during the filing. The judge asked Raj’s defence lawyer, “would you like to make a motion orally or in writing?”
Lyman said, “I can do it orally night now.”
Then Lawyer Lynam told the judge:
At this time, we move for a judgment of acquittal on all counts.
The government has failed to meet its burden of proof of establishing a conspiracy to engage ininsider trading, which is the charge in Counts One through Five, or their burden of establishing the substantive insidertrading counts, which are Counts Six through Fourteen.
I would like to go through a review of the evidence at this time. First of all, your honour, the first count is charged as the Rajaratnam Galleon insider trading scheme, and the government needs to introduce sufficient evidence on which the jury can find beyond a reasonable doubt that  Mr. Rajaratnam and someone else had an agreement to obtain material non public information from  an insider who breached his duty in return for a benefit, and  that the agreement was an agreement to trade on that information.
Then came the good stuff, when the defence laid out its argument that picks apart the prosecution’s case against Raj. We’ll be providing an in-depth look at the defence’s case later today, so stay tuned.
For now, a taste of what’s to come –
One of their arguments is that Smith may have sent Raj an email with information, but there’s no evidence that says that Raj ever requested, responded to, or even bothered to read the email.
The government relies on Adam Smith to prove Count One, your honour. Mr. Smith did not testify to any agreement with Mr. Rajaratnam to obtain information and trade on it. The most he testified to, your honour, is that he obtained confidential information from Kamal Ahmed from Morgan Stanley in 2005, 2006 and 2008, that he obtained this confidential information from Kamal Ahmed from Morgan Stanley in 2005, and then in 2006, and then in 2008, regarding ICST, ATI and Vishay, and he told Mr. Rajaratnam about that. But there is no evidence before the jury that Mr. Rajaratnam asked for this information or any similar information. There is insufficient evidence for the jury to conclude that Mr. Rajaratnam knew that Smith had obtained material nonpublic information from an inside source who breached a duty in disclosing the information.
Now, I understand that this is a conspiracy count, and the government will argue that they don’t have to prove all the elements of the substantive offence, but nevertheless, they do have to prove an agreement to commit a substantive offence, which means an agreement that involves all the elements of the substantive offence, which means an agreement to obtain material nonpublic information from an inside source who breached a duty in disclosing the information.
Now, what the evidence has established before the jury is that Smith simply said he got some information and that he told Mr. Rajaratnam about it, but there is no evidence before the jury, from which the jury could conclude, that Mr. Rajaratnam knew that this was anything other than a routine channel check, a routine check that Mr. Smith was supposed to be doing as an analyst and later a portfolio manager at Galleon.
The government did not call Mr. Ahmed as a witness. So there is no evidence in the record as to what Mr. Ahmed said or actually provided, and the evidence that’s before the jury is that Mr. Ahmed did not even work on two of the deals that the government is talking about. There is evidence in the record he didn’t work on the ATI deal at Morgan Stanley; he didn’t work on the Vishay deal at Morgan Stanley.
On the other deal, the ICST deal, what the government is relying on there are three e-mails that Smith wrote to Mr.Rajaratnam in which he described the transaction, described the subject as the two eyes. You recall those documents. But there is no evidence before the jury, your honour, that Mr. Rajaratnam ever requested those e-mails or even responded to them.