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Rajaratnam, the central figure in the broadest insider trading investigation in decades, sat expressionless as the judge's deputy read the jury's verdict to a hushed courtroom. The Galleon Group founder could face at least 15 years in prison when he is sentenced on July 29.
Wednesday's verdict, which many experts predicted given evidence from dozens of secretly recorded telephone calls, was a vindication of the prosecution case that Rajaratnam ran a web of highly-placed insiders between 2003 and March 2009 to leak corporate secrets. He earned an illicit $63.8 million as a result, the government argued.
"It's an historic verdict. It's a dramatic verdict," said Bill Singer, securities lawyer with Gusrae, Kaplan, Bruno & Nusbaum.
"It will likely set the stage for a dramatic change not only in the way that the Wall Street insider-trader activities are investigated and prosecuted, but most likely this will have a chilling effect on individuals and companies that trade."
The tipsters included executives at major blue chip companies such as Intel Corp, and Rajat Gupta, who was once head of elite management consultancy McKinsey & Co and a former Goldman Sachs Group Inc board member.
Gupta's involvement as an unindicted co-conspirator prompted the government to make the unusual move of calling Lloyd Blankfein, the investment bank's chief executive, to testify at the trial.
Little emotion
The jurors filed slowly into the courtroom from the jury room in mid-morning for the verdict of five counts of conspiracy and nine counts of securities fraud to be read.
Under federal sentencing rules that are not binding on the judge, Rajaratnam faces between 15 -1/2 years and 19 -1/2 years in prison, prosecutors said.
Chief defence lawyer John Dowd said Rajaratnam, 53, will appeal the case. In particular, he is expected to challenge the use of secret recordings -- tactics historically deployed in organized crime and drug trafficking cases, not white-collar probes.
"We'll see you in the 2nd circuit," Dowd told reporters in a reference to the appeals court in New York.
Rajaratnam's lawyers had stuck consistently to their main theme that his trades were guided by a trove of research and public information. Last November, they lost a bid to suppress the wiretaps after arguing that investigators misled the judges who approved the surveillance.
Galleon had $7bn under management at its peak in early 2008. It was wound down without losses to investors after the October 2009 arrest of Rajaratnam, a longtime US citizen and the richest Sri Lankan-born person.
The case was the first Wall Street insider trading trial to draw such wide attention since the mid-1980s scandal involving speculator Ivan Boesky and junk bond financier Michael Milken.
Prosecutors said Rajaratnam traded illegally on at least 15 stocks, many of them technology companies such as chipmakers Advanced Micro Devices Inc and ATI Technologies Inc, and search engine Google Inc.
After the jury was dismissed, Rajaratnam was released until his sentencing by presiding US District Judge Richard Holwell. He is free under a $10m bail package that will now include an electronic monitoring device and house arrest in his Manhattan apartment.
