NEW YORK — The government has misled jurors about comments made by a wealthy hedge fund manager in a series of phone calls secretly recorded by the FBI, his lawyer said yesterday in closing arguments at a massive insider trading trial.
Prosecutors have made the wiretaps the centerpiece of their case against Raj Rajaratnam, the former head of the Galleon Group, who is accused of making a killing off confidential information about major moves by publicly traded companies.
On one of dozens of tapes played for the Manhattan jury, Rajaratnam cautions another hedge fund manager, Danielle Chiesi, in 2008 that she should “keep radio silence’’ about an impending multibillion-dollar deal — “even with your little boyfriends.’’ On another, prosecutors allege, he advises her to deliberately buy and sell stocks to create a pattern of trading that would conceal the scheme.
Defense attorney John Dowd argued yesterday that the trades in question were part of a legitimate, sophisticated hedge fund strategy — not a cover-up — that was closely guarded by Galleon.
Rajaratnam “wanted Chiesi not to blab his positions all over Wall Street,’’ Dowd told the jury in a continuation of a closing argument that began Wednesday. “His trading strategies were valuable in and of themselves.’’
The government was to give a rebuttal later yesterday and the jury could begin its deliberations as early as Monday.
Rajaratnam has pleaded not guilty to conspiracy and securities fraud and remains free on $100 million bail.
Prosecutors have accused the 53-year-old defendant of routinely using a covert crew of “corporate spies’’ to get rich off inside trades, while the defense insists he was merely one of the market’s savviest investors.
Authorities have said Rajaratnam made profits and avoided losses totaling $68 million from illegal tips. Galleon, prosecutors say, became a multibillion-dollar success at the expense of ordinary stock investors.
Also yesterday, a lawyer pleaded guilty to an insider trading charge, raising to 20 the number of defendants who’ve done so in what authorities call the largest hedge fund insider trading case ever. Jason Goldfarb told a Manhattan federal court judge he made a “horrible mistake’’ by agreeing to accept money and arrange for secrets about mergers and acquisitions to be passed to a securities trader.