If Raj is acquitted of all charges, it will set a new precedent for insider trading in the media age.
The only way he could be acquitted is if the jury decides the information Raj learned from Chiesi, Anil Kumar, Roomy Khan, and Rajiv Goel, was out there for those who wanted it.
Dowd says the prosecution believes that the only way a tip is public is if a press release has been issued. He’s given them evidence of news articles, analyst reports, and emails from other people about the deals.
Dowd says Raj was supposed to drop everything and check to see if info was public before trading? Ridiculous.
If the info was out there, Dowd says, if it was available, you must acquit. He says in the real world, in the new media age, everyone talks, rumours are out there, and it’s public info that’s available to everyone who wants it.
And he’s right, because according to Judge Holwell, the jury has to determine that the tips were not generally available to the public — that if someone went looking or asking for the tip, they couldn’t find it — in order to convict Raj. Holwell even includes “word of mouth” in his definition of “out there.”
That’s where the jury’s decision could turn.
On the wiretaps, Raj hears from company insiders, and he urges Chiesi to keep “radio silence.” The prosecution says that is evidence that the tips were not available to anyone but Raj.
If the jury decides it was available in things like “news articles, analyst reports, and word of mouth,” Raj is safe.
So that’s the only way Raj could be acquitted, of the substantive charges anyway. That still doesn’t save him from the conspiracy charges, but if he’s acquitted of the substantive charges, chances are he’ll escape the conspiracy charges too.
The interesting thing is that if not now, then at some point, the definition of insider trading should probably change, if not become legal. Thanks to google and social media, the information is out there if you want it. Resources like expert networks make it even easier to get it. And criminalizing insider trading might encourage the average investor to think he’s on the same level playing field as hedge fund managers like Raj when he isn’t even close.
Which brings us to some questions raised by the Raj trial.