Opening Arguments in Rajaratnam Trial Try to Explain Wall Street to the Poors

This courtroom dawing shows ex-hedge fund tycoon Raj Rajaratnam (R), charged with insider trading, listening as Assistant US Attorney Jonathan Streeter (C) speaks in court before Judge Richard Howell (seated at top right) on March 9, 2011 in New York City, in a case which may prove a prime example of Wall Street corruption and greed. Sri Lankan-born Rajaratnam, 53, used insider information at his Galleon Group fund to pocket at least USD 45 million, prosecutors alleged after an investigation making extensive use of wiretaps. Rajaratnam, who is free on USD100 million bail, says he is not guilty. AFP PHOTO / Shirley SHEPARD (Photo credit should read SHIRLEY SHEPARD/AFP/Getty Images) Photo: SHIRLEY SHEPARD/2011 AFP

Opening statements, which began yesterday in Raj Rajaratnam's insider-trading trial, are crucial to the outcome of a case. Jurors often say they are won over by an argument initially or not at all. Between the hedge-fund jargon, the length of the trial (six weeks), and reams of evidence (2,400 wiretaps), both Assistant U.S. Attorney Jonathan Streeter and John Dowd, Rajaratnam's lead lawyer, had to crystallize their claims into a simple narrative. But perhaps because the jury is made up of teachers, retirees, and municipal workers — people who don't routinely see numbers with so many zeroes — it sounds like the lawyers may have boiled it down a little more than was necessary.

“Secret information that other people don’t have is a very valuable thing in the stock market,” Streeter told the jury, adding, "People at Galleon did their homework, but they cheated too. And that cheating is called inside information." He also employed a catchy refrain every time Rajaratnam's illegal stock trades were mentioned: "He didn't just buy a little. He bought a lot."

Although Dowd lapsed into financial jargon at points ("You all remember TARP?" he asked the commoners in the stands), he took a similar simplified approach. "In the real world, there's nothing wrong with talking about stocks or researching stocks," he told the jury. (You remember Martha Stewart?). Dowd also made the argument that because Galleon spends about $300 million a year and the alleged insider trades accounted for only a fraction of the million stock shares they trade annually, "it did not make sense to pay so much money for stock research to cover up so few trades." Okay, just how stupid does Dowd think they are?

Lawyers Make First Pitches to Jurors [WSJ]
Teachers, Municipal Workers Are Among Those Picked for Rajaratnam's Jury [Bloomberg]
It’s Greed vs. a Picture of Solid Research in Galleon Trial [DealBook/NYT]