While federal prosecutors said they have the tapes to prove that billionaire hedge fund manager Raj Rajaratnam was engaged in insider trading, defense attorney John Dowd said the government is taking "snippets" of conversations recorded on wiretaps out of context.
"You can't evaluate the conversation without understanding the context," Dowd said during an 1-1/2 hour opening statement Wednesday in Manhattan court for the trial of the hedge fund boss.
Rajaratnam was doing "what his investors hired him to do," Dowd said. The founder of the Galleon Group hedge funds was engaged in extensive research of publicly traded companies, assembling a "mosaic" of information -- information that was public and "available to anyone willing to work hard and dig for it," the defense attorney said.
In what prosecutors have described as the biggest hedge fund insider trading trial in U.S. history, Assistant U.S. Attorney Jonathan Streeter told the jurors a different story: "Greed and corruption. That’s what this case is all about."
Several people have already pleaded guilty to insider trading and are cooperating with the government.
Rajaratnam relied on a "corrupt network of people" to get access to secret information that ordinary investors didn’t have, Streeter said: "The defendant broke the law again and again and again. The law finally caught up with him."
Attempting to fill in the context that defense attorneys say jurors don't have, Dowd offered detailed explanations of several of Rajaratnam's trades, company by company. He also tried to discredit those cooperating with the government and serving as witnesses in this trial, saying many face 25 years of jail time and are trying to "save their own skin" by testifying against Rajaratnam.
Rajaratnam, who was born in Sri Lanka and immigrated to the U.S. in 1981 to attend Wharton Business School at the University of Pennsylvania, has pleaded not guilty to securities fraud and conspiracy to commit securities fraud. He has been free on $100 million bail since his October 2008 arrest.