Galleon Founder Raj Rajaratnam's Insider Trading Conviction Stands

A federal appeals court in the US refused to re-examine the conviction of Galleon Group hedge fund founder Raj Rajaratnam, the highest ranking financial executive to be convicted in a multi-year federal crackdown on insider trading.

The 2nd US Circuit Court of Appeals in New York rejected Rajaratnam's request to reconsider his May 2011 conviction by a Manhattan federal jury.

The hedge fund manager was found guilty on nine counts of securities fraud and five counts of conspiracy.

The 2nd Circuit did not provide a reason for its 18 November decision, reported Reuters.

Rajaratnam, serving an 11-year prison sentence, could now request the US Supreme Court to review his conviction.

Patricia Millett, a lawyer representing Rajaratnam, refused to comment.

Much of the US Securities and Exchange Commission's case against Rajaratnam relied on wiretap evidence.

Millett and Paul Clement, a former US solicitor general who worked on Rajaratnam's appeal, argued that the three-judge panel at the 2nd Circuit had allowed a "significant expansion" of wiretaps; and that the verdict was in conflict with decisions of other courts, including the Supreme Court.

They said it gave investigators "carte blanche to wiretap any professional investor whose business entails discussing publicly traded companies on the telephone."

SEC Crackdown

The US SEC took Goldman Sachs director Rajat Gupta and Rajaratnam to court over insider trading allegations last year.

However, Gupta remains free while he appeals his June 2012 conviction.

The illegal trading tips included information about Goldman Sach's financial results and a pivotal $5bn investment by Warren Buffett's Berkshire Hathaway during the financial crisis.

The government alleges that Rajaratnam raked in about $63.8m (£39.6m, €47.3m) in illegal profits from insider trading between 2003 and 2009.

Around 69 people have been charged with the crime since October 2009 and over 60 have been convicted so far.

The case is US versus Rajaratnam, 2nd US Circuit Court of Appeals, No. 11-4416.