The founder of the Galleon Group hedge fund, Raj Rajaratnam, faces 25 years in prison after a jury convicted him on 14 charges related to a six-year insider-trading binge that netted him more than $60 million. Rajaratnam, Forbes’ 236th-richest American in 2009, secured insider information from companies like Intel and Goldman Sachs before making buy and sell decisions. Federal prosecutors may be able to take momentum from the win into other Wall Street cases, but skeptics wonder: What about those responsible for the financial meltdown? Former Lehman Brothers CEO Dick Fuld? Countrywide founder Angelo Mozilo? Former Fannie Mae CEO Daniel Mudd? Former AIG CEO Hank Greenberg? Former GOP Sen. Phil Gramm? Former Fed Chairman Alan Greenspan? The list of villains goes on and on but none of them — with the possible exception of Bernie Madoff — have been prosecuted.

Already the $2 trillion hedge fund industry has changed its tactics, clamping down on the amount of information it releases to the public in an effort to shield itself from future prosecutions. It’s easy to see that Rajaratnam is just the tip of the iceberg and to get the feeling that his conviction is just a small token of what should actually be happening. — KDG


The federal jury in New York convicted Rajaratnam of nine counts of securities fraud and five counts of conspiracy for what prosecutors describe as the one-time billionaire’s central role in the most sweeping probe of insider trading at hedge funds on record.

The jury announced the unanimous verdict on the 12th day of deliberations in Manhattan federal court in what many legal experts said was a strong prosecution case using FBI phone taps and testimony of three former friends and associates of Rajaratnam.

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