The 9 Questions Nobody Answered At The Raj Trial


Today is Raj Rajaratnam’s big day.

After a six-week long trial, the alleged insider trader and billionaire who is the most prominent investor to face trial in at least the last 15 years will hear the prosecution’s closing remarks. Then he waits while the jury deliberates over the 14 counts against him (5 counts of conspiring and 9 counts of securities fraud).

The three big questions:

Will he be convicted? Most people think, yes.

How much time will he get? He could be locked in jail for up to 25 years (estimates have him at about 12). But he won’t be sentenced immediately. If and after he’s convicted, he will go to a hearing for that.

How steep will his fine be? The prosecution only has him allegedly profiting about $55 million on insider trading. That’s pocket change to him.

But there are some other questions left about some of the things that went on in the courtroom.

Did the defence team think re-ordering the jury's evidence documents would make Raj look innocent?

The defence team either tried to or succeeded in re-ordering the jury's evidence documents when it submitted another copy to them at the end of the trial.

The prosecution asked the judge if he would settle whether or not that was appropriate. (The prosecution would probably prefer the documents be in alphabetical or some more partisan order.)

Dowd said he didn't mean anything by it.

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Was the jury off put by the prosecution's dumbed-down powerpoint presentation of Raj's 4 alleged schemes?

The prosecuting lawyers had prepared a powerpoint slide presentation to show the jury step-by-step how Raj

The graphs they used really challenged Raj's credibility. But the photos were cheesy as heck. They might have insulted a 10-year old.

We've re-created one of them above.

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Did the jury catch on to the prosecution's tactics to prevent them from feeling empathy for Raj?

The prosecution didn't want to make Raj seem human.

There was a photo of everyone involved in the scheme except for Raj in the prosecution's powerpoint presentation.

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Both sides showed the jury empathy in their final remarks.

The prosecution's: I know we went over everything a lot. I'm sure you got bored with it. Thought: 'we already went over this, why are we doing this again?'

The defence's: I'm not going to take up anymore of your time. I thank you for your patience. I chose you, I have faith in you.

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With all of the evidence stacked against him, what was Raj's strategy pleading not guilty?

With all of the evidence stacked against him, Raj is sticking to his not guilty plea.

There's probably a .01% chance he'd try anything like this, but he is a billionaire and it only takes one jury member.

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Why didn't Goldman CEO Lloyd Blankfein say that Raj's defence evidence is meaningless because Goldman Sachs fires 10% every year?

Raj's defence team tried to explain to the courtroom that Raj sold Goldman stock before it reported one of its worst quarters ever in part because he saw an article that said Goldman Sachs would be laying off 10% of its employees.

The prosecution asked Blankfein, would this provide any indication that Goldman would report earnings lower than expected? No, said Blankfein. But had he gone one step further, it would have been much more obvious to the jury why not: Goldman Sachs lays off 10% of its employees regularly. As in, every year.

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'When something hits your price target, you don't go short it!' - on Raj's defence that he sold Google because it hit his price target, not because Danielle Chiesi told him that it was about to have report its worst quarter ever. Raj was long Google, and then he IMed a trader, 'Hear term is won't go higher than 550.' And later, 'sell everything reached my price target,' soon after speaking to Chiesi who had just spoken to an industry source.

'You wouldn't be desperate to go buy Goldman Sachs on that info.' - on Raj's defence that he bought Goldman because he anticipated TARP.

'Puts are stocks on steroids.'

The government's attorneys said this stuff as if it were fact.

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There was some question about the definition of 'nonpublic' information. In the new age of media where rumours spread like wildfire, the defence easily found articles and analyst reports that printed rumours and provided some evidence that Raj traded on public information. They say that Raj's info wasn't nonpublic just because a press release hadn't yet been issued. Their argument is, 'If it's public, if it's out there, you must acquit.'

The prosecution expects Judge Holwell to clear up the definition in his instructions to the jury:

  • The question is whether or not the info was nonpublic when the details were told to Raj, not if the details became public before the trade (an argument the defence used).
  • Ask your self if this is true: 'The public did not generally know at the time.'

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