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By TOM HAYS and LARRY NEUMEISTER   |   March 28, 2011    8:23 AM ET

NEW YORK -- Jurors at a closely watched federal trial are learning that the high-stakes world of hedge funds sometimes sounded like this:

"I need to get back to basics. I'm gonna become Mr. October."

That Was a Classy Thing Lloyd Blankfein Did at the Rajaratnam Trial This Week

Henry Blodget   |   March 25, 2011   11:11 AM ET

Goldman CEO Lloyd Blankfein testified at the Raj Rajaratnam insider trading trial the week.

From most accounts, Blankfein's testimony was devastating to Rajaratnam.

Along with just about every other piece of evidence that has been presented thus far, it suggested that Rajaratnam is guilty as charged and will soon be spending some time in a federal prison.

But the more surprising thing about Blankfein's appearance was not what he said on the stand, but what he did when he stepped down.

What did he do?

He walked over to the defense table and shook Raj Rajaratnam's hand.

That was a very classy thing to do, and it says a lot about Blankfein as a person.

Normally on Wall Street, when someone gets in trouble, everyone else on Wall Street rushes to distance themselves, lest they be considered a sympathizer -- or, worse, a co-conspirator. In private, some folks stay supportive, but they rarely show that support in public.

Instead, if forced to render public judgment, most Wall Street folks will either demur or express disgust and shock at the disgraceful conduct that has been discovered within their midst. That's the easiest and most popular response, of course. And it's also the least-risky response, as far as PR is concerned.

(You don't win PR points defending folks that the public has concluded are scumbags. And, for a variety of reasons, the public concludes that just about every Wall Street figure who gets in trouble is a scumbag. And some of them certainly are.).

In any event, Lloyd Blankfein is the sitting Chief Executive Officer of the most powerful and important Wall Street firm in the world. He's also the CEO of a firm that has come under intense scrutiny and criticism of its own in recent years. The "safe" thing for Blankfein to have done, therefore, would have been to behave the way many neutral witnesses at trials behave, which is to pretend that the defendant isn't even in the room.

Blankfein certainly could have behaved this way. He could have come in and out of his secret side door without ever acknowledging Rajaratnam. This wouldn't have meant he was passing public judgment on Rajaratnam, and Rajaratnam certainly would have understood this.

But, instead, in view of not only the courtroom and the jury but hundreds of reporters, Blankfein walked over to the defense table and shook Rajaratnam's hand.

Cynics will say that he did this because Rajaratnam is still a billionaire and one day, after he gets out of jail, will be a Goldman client again.

I wasn't there, and I certainly can't see inside Blankfein's head. But I think that's b.s.

I think Blankfein shook Rajaratnam's hand because, at a human level, he sympathizes with what Rajaratnam is going through. And, at a human level, he thought that letting Rajaratnam know that would be a stand-up thing to do.

And it was.

Regardless of what these two men represent -- and, symbolically, they represent a lot, especially these days -- they're still two men. They're men who work in the same industry and certainly know each other by reputation, if not personally. They're also men who have both been through rough times of late. One of these men has come through those rough times with his job, reputation, and career intact. The other is the defendant in a criminal trial that he is almost certain to lose.

And in that situation, at a human level, the gracious thing to do is exactly what Blankfein did: Walk over and shake the other man's hand.

Read more on the Raj Trial at Business Insider.

David Glovin, Bob Van Voris and Patricia Hurtado   |   March 23, 2011    4:47 PM ET

Lloyd Blankfein, chief executive officer of Goldman Sachs Group Inc. (GS), checks his bank's profit every day, prefers voice mail to e-mail and makes unscheduled calls to board members at times of market "uncertainty."

His testimony at the insider trading trial of Raj Rajaratnam was intended by prosecutors to show how one of those board members, Rajat Gupta, who served in 2007 and 2008, passed on information he learned from the board. Blankfein's 3 1/2 hours on the witness stand today before a packed Manhattan federal courtroom also included a few questions about the CEO's personal life.

Grant McCool and Jonathan Stempel   |   March 23, 2011   12:44 PM ET

NEW YORK (Reuters) - Goldman Sachs Group Inc Chief Executive Lloyd Blankfein made his much-anticipated appearance at Raj Rajaratnam's trial, telling jurors a former director at Wall Street's most powerful bank leaked inside details to the accused hedge fund manager.

Blankfein was called to testify by prosecutors in Manhattan federal court. His appearance intensifies the focus on what is already the largest U.S. insider trading case in decades.

Dressed in a dark suit, white shirt and blue tie, the Goldman chief walked swiftly to the witness stand in the tense, packed courtroom of U.S. District Judge Richard Holwell.

He hesitated slightly when asked for his name, saying "Lloyd, uh, Blankfein," before spelling it for the court reporter.

He told jurors that former director Rajat Gupta violated Goldman confidentiality policies by revealing to Rajaratnam the board's June 2008 discussion of a possible merger with Wachovia Corp or an insurance company.

Asked whether American International Group Inc was the insurer, he said, "I don't have a specific recollection, but it probably would have been." Prosecutors played a July 2008 wiretapped phone call in which Gupta and Rajaratnam discussed Goldman.

Prosecutors have accused the Sri Lankan-born Rajaratnam, a one-time billionaire, of illegally making $45 million from 2003 to 2009 based on tips from insiders, some of whom were highly placed executives in corporate America.

Rajaratnam, 53, has said his trades were based on his own research at his Galleon Group hedge fund and publicly available information. He has vowed to clear his name at trial.

Gupta was accused by the U.S. Securities and Exchange Commission of tipping Rajaratnam about Goldman's 2008 financial results, as well as a $5 billion investment in September 2008 by Warren Buffett's Berkshire Hathaway Inc at the height of the financial crisis. The SEC said Rajaratnam reaped $17.5 million from the illicit tips.

Blankfein testified that it is important for Goldman directors not to disclose private discussions about the publicly-traded bank's business.

"We don't want information about our company to get out until it's appropriate," he said.
He also said premature disclosure inhibits the "free exchange" of ideas among directors, who might otherwise fear that what they say privately could become public.

Gupta, a former worldwide managing director at the McKinsey & Co consulting firm, has denied the SEC's accusations and sued the agency last week.

Goldman has not been accused of wrongdoing. Blankfein, 56, has been Goldman's chief executive since June 2006.

During a break, Blankfein grinned and leaned on the jury box. He made a joke to the court staff and looked relaxed. Rajaratnam, meanwhile, stared straight ahead, expressionless.


Prosecutors earlier asked Holwell to block Rajaratnam's lawyers from cross-examining Blankfein on whether Goldman bears responsibility for the 2008 financial crisis, or is the subject of any Department of Justice or SEC probes.

They said such information is irrelevant to the trial, and could create unfair prejudice against Blankfein's testimony.

In court on Wednesday morning, Rajaratnam lawyer John Dowd said "I'm not going to inquire" about pending investigations. He also said he may recall Blankfein to the stand later.

Rajaratnam's trial began on March 8, and is expected to last two months.

Blankfein took the witness stand after Rajiv Goel, a former Intel Corp managing director and longtime friend of Rajaratnam who is cooperating with the government. Goel began testifying on Tuesday, and is expected to resume testifying later.

The case is U.S. v. Rajaratnam, U.S. District Court, Southern District of New York, No. 09-01184.

(Additional reporting by Basil Katz and Lauren Tara LaCapra; editing by Dave Zimmerman)

Copyright 2011 Thomson Reuters. Click for Restrictions.

Jury Hears Details Of Intel Leak In Insider Trading Case

Ryan McCarthy   |   March 22, 2011    5:55 PM ET

NEW YORK (By Jonathan Stempel and Grant McCool) - A former Intel Corp executive testified that he shared company secrets with his friend, hedge fund founder Raj Rajaratnam, the central figure in the biggest Wall Street insider trading trial in decades.

Rajiv Goel, the second friend-turned-government-witness to take the witness stand at trial in Manhattan federal court, told the jury on Tuesday that he tipped off the Galleon Group founder because they were close friends and "Mr Rajaratnam helped me financially a few times."

Sri Lankan-born Rajaratnam, 53, is the most prominent defendant in the largest U.S. hedge fund insider trading case in history. Prosecutors have accused him of illegally making $45 million based on tips from corporate insiders.

The one-time billionaire has denied wrongdoing, and said his trades were based on his own research and publicly available information. He faces up to 20 years in prison if convicted of securities fraud.

Twenty-six people have been charged in the probe, and 19, including Goel, have pleaded guilty. He has yet to be sentenced.

The trial began March 8 with testimony from an FBI agent who monitored phone taps and from star government witness Anil Kumar, a former McKinsey & Co executive who was another longtime friend of Rajaratnam and who said he had leaked client secrets.

Goel, who worked at Intel from 2000 until his arrest along with Rajaratnam and Kumar in October 2009, testified that he was obligated under company policy to keep information confidential.

"I violated my obligations," Goel said under questioning by federal prosecutor Reed Brodsky. He also said: "I shared it (company information) with Mr. Rajaratnam."

Indian-born Goel, 52, is expected to testify for two or three days and he will be cross-examined by one of Rajaratnam's defense lawyers. Goel admitted in his plea proceeding last year and at trial on Tuesday that he tipped Rajaratnam about a big wireless network transaction involving Clearwire Corp.

Also on Tuesday, a current Intel executive testified that confidential details about Clearwire were leaked before the announcement of the deal.

Prosecutors argued that Rajaratnam, who is on trial on charges of trading on illicit stock tips, bought 125,800 Clearwire shares based on inside information.

They contend that his March 24, 2008, purchase came two days before news reports of a possible 4G WiMax venture between Clearwire and Sprint Nextel Corp, involving $1 billion of capital from Intel. The venture was announced on May 7, 2008.

In his second day of testimony, Intel Vice President Sriram Viswanathan said Goel would have been dismissed immediately from his job for discussing details of a possible Sprint-Clearwire partnership, including capital commitments from Intel, Comcast Corp and Google Inc.

Viswanathan also said Goel also would not have been authorized to disclose that Intel had held a board meeting on the matter. Those details were disclosed to the jury through phone taps of conversations between Rajaratnam and Goel.

The case is U.S. v Rajaratnam et al, U.S. District Court, Southern District of New York, No. 09-01184.

(Reporting by Jonathan Stempel and Grant McCool, editing by Matthew Lewis and Gerald E. McCormick)

Copyright 2010 Thomson Reuters. Click for Restrictions.

  |   March 18, 2011    2:58 PM ET

NEW YORK (Reuters) - A former Goldman Sachs Group Inc (GS.N: Quote, Profile, Research, Stock Buzz) director accused of leaking confidential boardroom information has sued U.S. regulators, saying they are trying to unfairly deprive him of a jury trial.

Rajat Gupta is fighting civil charges that he tipped Galleon hedge fund manager Raj Rajaratnam, the central figure in a sprawling insider trading case, about Warren Buffett's plans to invest in Goldman Sachs at the height of the financial crisis.

Gupta said in his complaint on Friday that the Securities and Exchange Commission is trying to retroactively apply the Dodd-Frank financial reform law by filing a so-called administrative proceeding against him. The proceeding means he must defend himself in a court that is part of the SEC rather than in a federal court, where he could have a jury trial.

The SEC's move is "an attempt to bring down a man of sterling reputation and remarkable achievements without the procedural safeguards historically accorded to all persons similarly charged," according to his complaint filed in Manhattan federal court.

The SEC unveiled its case against Gupta on March 1, just days before Rajaratnam's criminal trial began. Gupta is one of the highest-ranking corporate leaders implicated in the government's wide-ranging insider trading probe. He has not been criminally charged.

Gupta, 62, is a former worldwide managing director at management consultant McKinsey & Co. He said in his complaint that he denies all allegations of wrongdoing.

Neither McKinsey nor Goldman has been charged with wrongdoing.

Florence Harmon, a spokeswoman for the SEC, declined to comment on Gupta's complaint.

The case is Gupta v. Securities and Exchange Commission, U.S. District Court, Southern District of New York, No. 11-1900.

(Reporting by Martha Graybow and Grant McCool; Editing by Lisa Von Ahn and Gerald E. McCormick)

Copyright 2011 Thomson Reuters. Click for Restrictions

Is Corruption on Wall Street All in the Eyes of the Beholder?

  |   March 18, 2011   11:40 AM ET

Read More:

John Carney   |   March 14, 2011   12:37 PM ET

Despite pressure from federal prosecutors overseeing the case against Raj Rajaratnam, the Securities and Exchange Commission pushed ahead with its insider trading case against Rajat Gupta because of his status as a sitting board member on public companies.

Grant McCool and Basil Katz   |   March 11, 2011    7:49 AM ET

NEW YORK (Reuters) - A disgraced former McKinsey & Co partner told jurors he leaked secrets about the elite consulting firm's clients in exchange for $1.75 million in hidden payments from onetime friend Raj Rajaratnam, the main defendant in the biggest U.S. insider trading trial in years.

Anil Kumar said the Galleon hedge fund founder told him: "You work very, very hard. You are underpaid. People are making fortunes ... so just keep track of your knowledge and share it with me."

The calmly delivered testimony for the prosecution capped a day when the Manhattan federal jury also for the first time heard the voice of Rajaratnam captured on FBI wiretaps. On the tapes, he is heard at times giggling with associates and on other occasions speaking rapidly in a high-pitched voice, rattling off numbers and acronyms for companies.

Kumar's testimony will resume on Monday.

Prosecutors say the Galleon Group founder made $45 million in illicit profit from 2003 to March 2009 through insider trading. His multimillion-dollar defense team contends that he conducted legitimate stock research and did not gain an unfair advantage over other investors.

Rajaratnam took notes on a legal pad while Kumar testified. Kumar, 52, dressed in business attire, avoided Rajaratnam's gaze.

The Sri Lankan-born Rajaratnam, free on bail since his October 2009 arrest, is accused of creating a network of tipsters who fed him inside information. His trial is the signature case in an insider trading probe that has shaken the secretive $1.9 trillion hedge fund industry.

Kumar is among 19 people who have pleaded guilty to conspiracy or fraud charges in the broad Galleon probe. He admitted accepting $1.75 million from Rajaratnam and said he tipped the onetime billionaire on deals involving McKinsey clients including chipmaker Advanced Micro Devices.

"I told him there were advanced discussions both with Dell and Hewlett Packard," Kumar testified. He said Rajaratnam responded that "that was very useful information."

AMD ultimately announced a pilot program with Hewlett Packard in February 2004 worth $400 million to the chipmaker.

U.S. prosecutor Jonathan Streeter projected onto courtroom screens a confidential McKinsey document that referred to computer maker HP with the code name "New Hampshire."

The Galleon probe has been embarrassing to McKinsey, which has not been accused of wrongdoing. The U.S. Securities and Exchange Commission accused Rajat Gupta, the consultancy's former chief, of supplying Goldman Sachs secrets to Rajaratnam when he sat on the bank's board.

The case stands out from previous insider trading scandals -- such as those of the mid-1980s involving speculator Ivan Boesky and junk bond financier Michael Milken -- because of the government's widescale use of wiretaps.

Rajaratnam, sitting behind the defense table in the crowded courtroom, did not react to hearing the digital recordings of his mobile phone calls being played.

Along with Kumar, the recordings featured another friend-turned-government-witness, Intel Corp's Rajiv Goel, and former Galleon employee Adam Smith, who will also testify in the two-month trial.

In a May 2008 call played for the 12 jurors, Rajaratnam is heard talking with one-time employee Smith.

Rajaratnam asks Smith how the market is treating him and Smith answers: "Like a baby treats a diaper." Rajaratnam laughs and the two men go on to discuss Vishay Intertechnology Inc, a company prosecutors cited in charges against both men.

The government contends that Smith and Rajaratnam conspired to obtain secret information about a potential acquisition of Vishay. As it turned out, Vishay was never acquired.

Kumar's testimony followed that of FBI Special Agent Diane Wehner, who described how she became familiar with Rajaratnam's voice by listening in to his conversations. But defense attorney Terence Lynam, on cross examination, pointed out that she did not know whether Rajaratnam's discussions caught on the tapes were based on Galleon stock research or not.

The case is USA v Raj Rajaratnam et al, U.S. District Court for the Southern District of New York, No. 09-01184.

(Editing by Steve Orlofsky, Gary Hill)

Copyright 2011 Thomson Reuters. Click for Restrictions.

Grant McCool and Basil Katz   |   March 10, 2011   11:08 AM ET

NEW YORK, March 9 (Reuters) - A corrupt man or a legitimate stock researcher?
Prosecution and defense lawyers painted starkly different portraits of hedge fund manager Raj Rajaratnam at the start of the biggest Wall Street insider trading case in a generation.
Rajaratnam, a Sri Lankan-born, one-time billionaire, sat impassively and wrote occasional notes on a legal pad during more than two hours of opening statements in his high-stakes trial in Manhattan federal court.

"Greed and corruption. This is a case about that man right there, Raj Rajaratnam, using stolen business information to make tens of millions of dollars," prosecutor Jonathan Streeter said, pointing at Rajaratnam and then slowly telling the jury how the government will show he cheated and tried to cover up the trail.

Defense lawyer John Dowd, mostly reading for 90 minutes from a prepared statement, offered a host of alternative reasons for Rajaratnam's alleged illegal information gathering and trades. He said "the government has it wrong" and insisted the Galleon Group founder engaged in legal stock research and analysis that made him successful.

Dowd attacked government allegations that former Goldman Sachs director Rajat Gupta tipped Rajaratnam about a $5 billion confidence-boosting investment in Goldman by Warren Buffett's Berkshire Hathaway at the height of the 2008 financial crisis and on the Wall Street bank's earnings.

"Any information that Raj received from Gupta in October 2008 was immaterial as there was a month left in the quarter," a slide shown by Dowd read. Dowd was responding to the allegation that Rajaratnam was given a tip about Goldman's earnings.

The government accuses Rajaratnam, the central figure in a vast insider trading probe that shook up hedge funds, of reaping $45 million in illegal profit between 2003 and March 2009. The U.S. Justice Department has made insider trading probes into the secretive $1.9 trillion hedge fund industry a priority, with Rajaratnam's prosecution its signature case.

The defense team faces hundreds of secretly recorded phone calls in evidence and former friends or employees who will testify for the prosecution during the two month long trial.


Streeter said former Rajaratnam friends and business associates Anil Kumar, formerly of McKinsey & Co and former Intel executive Rajiv Goel would testify that they gave the fund manager company secrets. Former Galleon employee Adam Smith, who has also pleaded guilty in the case, will testify.

Dowd told jurors the witnesses agreed to testify "to save their skins."

In the wood-paneled courtroom, both lawyers stood at a podium when it was their turn to address the jury. Document boxes and files were piled in one corner, under the defense table and next to the prosecutors' desk.

Streeter said Rajaratnam obtained an illegal advantage over ordinary investors. "He exploited a corrupt network of people to obtain information" about company secrets such as earnings and mergers, the prosecutor said.

He said Rajaratnam "gets tomorrow's business news today."

Rajaratnam attended the trial with no one except his lawyers, unlike many defendants who have family or friends with them.

Rajaratnam's lawyers contend that the government has significantly broadened its definition of insider trading.

"There is a real world context in which law abiding professionals discuss stocks and trades," Dowd told the jury of 12 and six alternates. "In the real world people are discussing stocks. It is legal and it is good for all of us."


Not since the mid-1980s has a Wall Street insider trading case grabbed such wide public attention. Then, speculator Ivan Boesky, Drexel Burnham Lambert and its junk bond chief, Michael Milken, were prosecution targets.

Rajaratnam faces up to 20 years in prison if convicted of the most serious charge of securities fraud.

Since arresting Rajaratnam in October 2009 and announcing criminal charges against 26 former traders, executives and lawyers, authorities have pressed on with what they call the biggest ever hedge fund insider trading probe.

Nineteen people have pleaded guilty in the case. It stands apart from past insider trading investigations because of the government's wide-scale use of phone taps.

The jurors include a nurse, a graphic artist and a city transportation department employee.
The case is USA v Raj Rajaratnam, U.S. District Court for the Southern District of New York, No. 09-01184. (Additional reporting by Basil Katz, editing by Andrew Marshall, Dave Zimmerman, Gary Hill, Bernard Orr and Carol Bishopric)

Copyright 2011 Thomson Reuters. Click for Restrictions.

Biggest Insider Trading Trial In A Generation Begins

Ryan McCarthy   |   March 9, 2011    8:37 AM ET

NEW YORK (Reuters) - The biggest Wall Street insider trading criminal case in a generation goes to trial on Wednesday, when prosecutors open their case against Galleon Group founder Raj Rajaratnam whose arrest 16 months ago shook the hedge fund world.

A jury of New Yorkers will hear prosecutors outlining how they believe Sri Lankan-born Rajaratnam broke the law by designing a complex web of stock tippers who helped him reap $45 million in illicit profit between 2003 and March 2009.

For the first time, the jury and observers of the high-profile case will be given an insight into the defense trial strategy, which faces seemingly overwhelming evidence of leaked corporate secrets, tapped telephones and friends-turned-government witnesses.

"The defense doesn't really get to show the whole picture until the trial and then it really can be quite different and end up with surprising results," said Stuart Gasner, securities fraud defense lawyer at Keker & Van Nest law firm in San Francisco and a former prosecutor.

The selection of a jury of 12 and six alternates began on Tuesday and is expected to be completed on Wednesday.
Presiding U.S. District Judge Richard Holwell sent prospective jurors home with a warning not to read anything about the highly-publicized case. He then told prosecutors and Rajaratnam's multimillion dollar defense team that opening statements would go ahead "for sure" on Wednesday.

Since arresting 53-year-old U.S. citizen Rajaratnam in October 2009 and announcing criminal charges against 26 former traders, executives and lawyers, the U.S. government has pressed ahead with what it calls the biggest probe of insider trading in the $1.9 trillion hedge fund industry.

Nineteen people have pleaded guilty in the Galleon case. It stands apart from past insider trading investigations because of the government's wide-scale use of phone taps. As many as 173 audio recordings will be played to the jury during the two-month long trial.

Rajaratnam was mobbed by photographers and TV crews when he walked into the courthouse on Tuesday morning and as he left at the end of the day. Dressed in a brown coat and a suit, he said nothing on both occasions.
Chief defense lawyer John Dowd has argued in court papers that prosecutors have broadened the definition of insider trading. He said a money manager's liberty should not be at risk because he trades on a stock while knowing something about the company.

The burden of proof is on prosecutors to convince the jury that their evidence shows Rajaratnam knew he was trading on confidential information provided by someone who had a fiduciary duty not to disclose it.

In the week before the trial, U.S. market regulators and prosecutors uncorked allegations against Rajaratnam's friend and former Goldman Sachs Group Inc director Rajat Gupta. They described phone calls in which he tipped Rajaratnam about confidential Goldman information before it became public.

Gupta faces a civil proceeding brought by the U.S. Securities and Exchange Commission but he has not been criminally charged. Lloyd Blankfein and David Viniar -- the Goldman Sachs chief executive and chief financial officer
-- were on a list of people who might testify or be mentioned during the trial.

The case is USA v Raj Rajaratnam, U.S. District Court for the Southern District of New York, No. 09-01184.
(Reporting by Grant McCool, editing by Andrew Marshall)

Copyright 2010 Thomson Reuters. Click for Restrictions.

Lila Shapiro   |   March 7, 2011    2:00 PM ET

Jury selection starts Tuesday in the biggest insider trading trial in a generation, and the questions put to potential jurors get right to the heart of the matter: "How honest do you think Wall Street Executives are?"

Raj Rajaratnam, the billionaire Galleon Group founder accused of making $45 million trading on illegal stock tips, plans to take the witness stand himself during the trial, the NYT reports. If convicted, Rajartnam faces up to 20 years in prison.

Meanwhile, Rajartnam's defense team is trying to weed out any jurors who might feel any antipathy towards Wall Street. Another hurdle the defense faces is finding jurors who are still unfamiliar with the case, which is sure to be one of the most closely watched in Wall Street's history.

The New York Post reports that defense lawyer John Dowd has already criticized the timing of the SEC's complaint against former Goldman Sachs director Rajat Gupta -- accused of passing tips about Warren Buffett's investment plans in Goldman Sachs to Rajaratnam -- saying it was intended to taint the jury pool. From the Post:

Dowd says he tried in vain to stop the action with a letter to SEC chief Mary Schapiro on Monday, saying the SEC action against Gupta the week before the trial would "play havoc with jury selection and Mr. Rajaratnam's Sixth Amendment rights" to a fair trial.

In addition to more standard questions concerning jurors' educational level and background, the form (printed in full below) asks:

*Hedge Funds have been reported in the news over the past few years. Do you
have any feelings concerning this industry? ____ Yes ____ No
If Yes, please describe your feelings:

*Have you ever invested in a Hedge Fund(s)?
____ Yes ____ No

If Yes, were you satisfied with your investment?
____ Yes ____ No

*How honest do you think Wall Street Executives are?
1 Not at All Honest
2 Below Average Honesty
3 Average Honesty
4 Above Average Honesty5 Extremely Honest
Please explain your answer.

*Do you have any feelings about Wall Street Executives?
____ Yes ____ No
Do you feel it more likely than not that, if accused of impropriety, a Wall
Street Executive is probably guilty?
____ Yes ____ No
Do today's Wall Street Executives lack integrity?
____ Yes ____ No
Are today's Wall Street Executives greedy?
____ Yes ____ No
If accused of insider trading, is it more likely than not that a Wall Street Executive is guilty?


(Via the NY Post)

Peter Lattman   |   March 7, 2011    9:14 AM ET

When Raj Rajaratnam was a hedge fund baron managing billions of dollars and being lionized as one of Wall Streets savviest investors, he was asked what made him so successful.

Dan Levine   |   March 3, 2011    3:02 PM ET

SAN FRANCISCO (Reuters) - SAP AG (SAPG.DE: Quote, Profile, Research, Stock Buzz) has been ordered to pay Oracle Corp (ORCL.O: Quote, Profile, Research, Stock Buzz) $1.3 billion for stealing files in Silicon Valley's priciest legal controversy -- and San Francisco's top federal prosecutor may raise the stakes even more.

Newly installed Attorney Melinda Haag in San Francisco is now personally reviewing a criminal copyright investigation, which is independent of the civil case won by Oracle last year, one attorney familiar with the probe said.

The decision on whether to prosecute that case comes as Haag tries to make Northern California a hub of white collar enforcement that rivals New York. And it is just those types of headline-grabbing, high impact prosecutions that observers say have been lacking from federal gumshoes in the Bay Area.

In an interview with Reuters, Haag, who took over the job last August, said big prosecutions send a message, and it is important for her office to send them.

"High profile cases have deterrent value just because people are paying attention," she said.
Haag would not confirm or deny any criminal investigation surrounding SAP. Spokespeople for SAP and Oracle declined to comment.

With its robust financial services sector, high-tech giants and biotech start-ups, Northern California has long been viewed as a natural location for corporate crime enforcers.

But when the FBI recently banged down doors in Silicon Valley to nab insider trading defendants, San Francisco federal prosecutors found themselves making perfunctory court appearances on bail, before the cases were shipped back East for the heftier legal battles.
The realm of insider trading -- particularly the case around hedge fund Galleon -- is probably the most glaring example of Manhattan federal prosecutors taking the lead over their Bay Area colleagues.

Hedge fund founder Raj Rajaratnam heads to trial in New York next week, even though a swath of the alleged criminal conduct, related guilty pleas, and a probe of expert networks used by hedge funds have come from Silicon Valley, generating strong business for California defense lawyers.

Haag flashes a wry grin at the Galleon case and notes that New York took charge before she became U.S. Attorney.

"If the misconduct occurred here, the witnesses are here, and the evidence is here, the case should be handled here," Haag said. "New York may beg to differ, and we may have to have some conversations down the road."

Ten years ago, current FBI director Robert Mueller was U.S. Attorney in San Francisco and the office was front and center in several cases, eventually taking a big role in the Enron Task Force. But under Mueller's successor, Kevin Ryan, several experienced white collar prosecutors -- including Haag -- left for private practice.

White collar crime case charges dropped by half in five years to a low of 62 in fiscal year 2005, according to U.S. Department of Justice statistics.

The case figures started to come back up under Joseph Russoniello, Haag's immediate predecessor, but the best known recent Bay Area federal case is the upcoming perjury trial against baseball home run king Barry Bonds over performance enhancing drugs.

Haag's ambitions also face some budget realities. Eight job offers to prospective prosecutors -- which were already accepted by the candidates -- have been held up in Washington due to a hiring freeze, Haag said.


A criminal copyright case against SAP could be tough.

The allegations against SAP have been public since Oracle sued in 2007, claiming that an SAP subsidiary wrongfully downloaded millions of Oracle's files. SAP is seeking to reduce the $1.3 billion verdict.

Even though SAP admitted to liability in the civil case, if federal prosecutors brought a case against the company or any individuals they would have to prove an element of willfulness that Oracle didn't, said Eric Goldman, a professor at Santa Clara University School of Law.
"Willfulness in a criminal context is a very high bar," Goldman said.

Speaking generally, Haag said prosecutors' speed is an important factor in encouraging tech companies to come forward when they are hacking victims. Otherwise they may remain silent.
"Sometimes these companies do make a business decision that they don't want to report it; they don't want the publicity," she said.

Haag has added two prosecutors to a group devoted to health care fraud in the district, which has been a Justice Department priority nationally. It was part of a larger office reorganization that had some prosecutors still settling into new offices in January.

That process, Haag acknowledged, led to lost time, and she knows that charging cases is the key to publicizing her office's efforts.

"My mantra with people here is this is a wonderful case, a great case that you're investigating, and no one knows about it," Haag said. "So let's get it resolved."
(Reporting by Dan Levine, editing by Gerald E. McCormick)

Copyright 2011 Thomson Reuters. Click for Restrictions.