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Billionaire investor Raj Rajaratnam has been found guilty of fraud and conspiracy by a federal jury in New York. He will likely face up to 15-1/2 years in prison, according to Reuters.
His conviction - and the government's push for use of wiretap evidence against Rajaratnam in trial - will have repercussions in securities law, and the way securities violations are prosecuted.
"It's a historic verdict. It's a dramatic verdict. It will likely set the stage for a dramatic change not only in the way that the Wall Street insider-trader activities are investigated and prosecuted, but most likely this will have a chilling effect on individuals and companies that trade," says Bill Singer, a securities lawyer with Gusrae, Kaplan, Bruno & Nusbaum to Reuters.
Rajaratnam's attorneys argued that he relied on legal information for his stock deals - information released in the news, public press releases, or through analyst reports, reports The New York Times. However, prosecutors successfully argued that he relied on insider tips, a claim that was bolstered through the use of wiretap evidence.
The 45 tapes were played for the jury, and likely swayed their final decision to convict, reports The New York Times. Wiretap evidence has been increasingly used by federal investigators in pursuing white collar criminals such as Rajaratnam.
As an attorney dealing with companies that regularly trade or sell securities, keeping on top of securities law is vital. Advising employees about acceptable behavior can also be crucial.
However, getting employees to comply is more difficult than it sounds. The steps sound simple enough - keep all insider information completely confidential, and advise company officers to not act on trades spurred on by illegal information. Fully implementing these policies can be tough, since all it takes is for one employee privy to confidential information to accidentally let some insider information to slip.
While Raj Rajaratnam's attorneys plan on appealing the conviction and the use of the wiretap evidence, recent trends tend to indicate that the phone taps might be here to stay, reports Reuters. So, be careful what you say - someone may be listening in.
Meeting with a lawyer can help you understand your options and how to best protect your rights. Visit our attorney directory to find a lawyer near you who can help.