If Raj Rajaratnam loses the Insider Trading Trial Will Sam Barai And Others Plead Guilty?

The life and trials of the hedge fund managers and the market insiders turned tipsters will surely be made into a major Hollywood film soon. I’d bet there are writers already working the project as the plot unfolding in the NY Courtroom tells a fascinating tale of human greed. The writers won’t have a hard time constructing their dialogue. All they need to do is listen to the hundreds of wiretap recordings. Having heard the actual wiretap recordings of Raj Rajaratnam’s conversations with Anil Kumar, his McKinsey tipster, it is easy to see why prosecutors chose Rajaratnam for the first trial. He is a brilliantly cunning networker, spreading his inquiries far and wide, gathering minute details from friends and paid informants and setting off bets resulting in billions in profits. He wasn’t so brilliant as to conduct his business in private though. Now, as a subplot, sitting silently in the wings are four other hedge fund managers, and many assistants also charged with securities violations, conspiracy and some with obstruction of justice. They are no doubt watching this trial in advance of their own. I hope the Hollywood writers don’t forget this. Imagine what life is like for them, watching their world unravel, spiraling down and facing many years in a federal penitentiary. Listening to Rajaratnam, hearing him is a little like watching an experienced military field commander in battle. Aggressively gathering information from all platoons, drones, satellite and other intel to develop precise, well focused decisions based on all data. Unfortunately for Rajaratnam, the evidence against him appears damning. He accepts confidential information (allegedly), then instructs his web of contacts on just what information wants and needs and how they should get it, allegedly. Query, if Rajaratnam loses and is sentenced heavily, will the many others similarly charged plead guilty in the hopes of a lighter sentence? The answer is not clear. Take Sam Barai, the Harvard B School Alum, nearly deaf founder of Barai Capital Management. The problem is that he has been charged with wire fraud and conspiracy to commit securities violations and these have minimum prison sentences under the federal guidelines. The question is what would he gain from a plea deal as his sentence might be quite long? Authorities also allege that Barai and research analyst Donald Longueuil sought to conceal their activities by destroying documents, emails and computer records and as a result they were both also charged with obstruction of justice, which tends to bode poorly for a low sentence if Barai were to plead guilty. A lot may depend on the nature of the evidence against him in terms of wiretap recordings. If they are similar to those played in court over the past week, his own words may result in his conviction. It is said that Rajaratnam could face ten years in prison if convicted. To listen to the wiretapped conversations of Raj Rajaratnam and his sources, see The Wall Street Journal.