US Attorney Preet Bharara’s successful conviction of hedge-fund manager Raj Rajaratnam on 14 counts of insider trading and conspiracy charges is a big victory for those who believe in the importance of a level playing field in the financial markets.
Rajaratnam may be less well-known than some of the state’s elected officials Bharara’s office has busted on public corruption charges, but this case — and the message that it sends — has a far more significant impact on New Yorkers and the nation at large.
Insider trading is not, as some might argue, a victimless crime.
The immediate victims are those who trade equities based on what is publicly known. Insiders, meanwhile, can enrich themselves by buying or selling based on privileged information.
Rajaratnam made $64 million in just that manner between 2006 and 2009 — a drop in the bucket for someone whose personal worth was once valued at $1.5 billion, and who ran a $7 billion hedge fund.
So why bother stealing it?
Greed.
Not that motives ultimately matter.
At the same time, $64 million is a pile of dough for those mutual- and pension-fund investors, to say nothing of individuals, who had their pockets picked by Rajaratnam’s scheming.
And they make up the lion’s share of stock-market traders.
Meanwhile, the negative impact of insider trading extends much farther than just individual losses.
If it’s not seen as a serious offense and perpetrators aren’t punished to the full extent of the law, the integrity of the broader markets will suffer.
Fearful investors will put their money elsewhere.
That’s a recipe for national financial disaster and, of course, a calamity for New York, which depends on a robust Wall Street for its well-being.
The appeals in this case will be endless, of course.
But Rajaratnam is looking at close to 20 years behind bars when he’s sentenced, perhaps in July.
Can’t say that he hasn’t earned every day of that — and then some.