Each side claims support from tapes in Galleon trial

When the Manhattan jury listened to FBI recordings of Raj Rajaratnam, “You heard the defendant commit his crimes time and time again in his own words,’’ Assistant US Attorney Reed Brodsky said in closing arguments at the biggest insider trading trial in history.

“The tapes show he didn’t believe the rules applied to him,’’ Brodsky added. “Cheating became part of his business model.’’

Defense attorney John Dowd, in his closing, called the government’s case unfair and misleading. He argued the evidence instead showed his client was “disciplined’’ and “careful with clients’ money’’ at his Galleon Group of hedge funds.

“He worked hard for Galleon investors to make smart investments,’’ Dowd said. “It’s legal to seek out information and trade stock on it. That was Raj’s job. That was his duty.’’

The jury heard more than 45 audio recordings during seven weeks of testimony.

The government also relied on the testimony of a parade of cooperators it says were corrupted by Rajaratnam, including a disgraced technology industry executive and analysts. Prosecutors also implicated a former Goldman Sachs board member as one of the tipsters.

The defense attacked the credibility of the cooperators, who they said pleaded guilty to various securities charges and took the witness stand to save their own skins.

“Their testimony is unreliable and worthless,’’ Dowd said while his 53-year-old client sat quietly on a bench behind a team of attorneys crowded around the defense table. “When the government came knocking, they blamed it all on Raj.’’

Authorities have said Rajaratnam made profits and avoided loses totaling $68 million from illegal tips. Galleon, prosecutors say, became a multibillion-dollar success at the expense of ordinary stock investors who did not have the access to secrets about the earnings surprises of public companies and early word of mergers and acquisitions.

The defendant had the illegal advantage of “trading on tomorrow’s news today,’’ Brodsky said.

Brodsky repeatedly referred to the audio evidence, telling the jury, “Let’s go to the tapes,’’ and playing incriminating segments. He argued that the tapes showed that insider trading — and orchestrating cover-ups — was business as usual for Rajaratnam.

Rajaratnam’s attorney countered by arguing that the tapes only reveal he was doing his duty by asking questions about information already circulating in the “real world’’ of high finance. He accused the government of misleading the jury by claiming information about a company’s plans and performance wasn’t public until it was formally announced.

“That’s ridiculous,’’ he said. “It’s a fiction. You cannot convict Raj on a fiction.’’

The closing arguments came in the only trial so far in a three-year investigation targeting inside trading in the hedge fund industry.

The probe has resulted in more than two dozen arrests and 19 guilty pleas from former hedge fund traders and employees of public companies who Brodsky said were corrupted by Rajaratnam’s lust for illegal profits.

It also has led to a second investigation aimed at consultants in the securities industry who pass off inside information as the product of legitimate research.

Defense closing arguments in the case were expected to conclude today, followed by a government rebuttal.