Insider Trading Trial Begins For Rajaratnam

Raj Rajaratnam's trial is set to begin tomorrow. Jury selection will begin on Tuesday, marking the beginning of the estimated two month trial. Rajaratnam, co-founder of the Galleon Group hedge fund, is accused of making profits north of $45 million through tips illegally gained through insider trading.

This trial will not only give the public insight into the hedge fund industry, but also the investigatory tactics employed by the U.S. Department of Justice. Secretly recorded phone conversations between Rajaratnam and his co-conspirators will be played during the trial, possibly providing evidence of Rajartnam's guilt.

It is anticipated that Rajaratman's defense will take the approach that Rajaratnam was unaware that the information he received was confidential. Being a savvy investor, Rajaratnam routinely did extensive research into the companies in which he invested. This research included speaking to high-ranking employees of the companies. In the upcoming defense, it may be asserted that it was the informants' duty to not reveal the information, thus Rajaratnam should not be held accountable.

Rajaratnam was arrested on insider trading charges 17 months ago. Acquittal of charges is unlikely, as is that Rajaratnam will plead guilty. A deal for pleading guilty generally comes at the beginning of a case. Because of the amount of time passed, there is not much incentive for the prosecution to offer a plea agreement at this time. If one were to be offered, it would not provide Rajaratnam with a much different sentence than should he be convicted of the crime.

Rajaratnam has employed John Dowd as his chief defense lawyer. He has a history of high-profile cases, including Major League Baseball's "Dowd Report" and John McCain's campaign contribution scandal.

At the time of Rajaratnam's arrest, five others were also arrested on charges of insider trading. These five have all plead guilty to the charges. The incentive to plead guilty is to avoid massive legal costs incurred during the trial. It is estimated that Rajaratnam has already accumulated over $20 million in legal costs thus far. Considering Rajaratnam's extreme wealth, it is well worth the investment to possibly win the case, an option not available to most individuals with charges such as these.