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Former hedge fund founder Raj Rajaratnam leaves court after he was convicted on all counts of fraud and conspiracy in one of the biggest Wall Street insider trading trial in a number of years.EMMANUEL DUNAND

The insider-trading conviction of once influential New York hedge fund operator Raj Rajaratnam on all 14 counts of securities fraud and conspiracy merits the applause it has been getting. It's rare for the regulators to go after such a big fish for insider trading and rarer still to score a resounding conviction. But whether this marks some sort of major breakthrough that will put the fear of God and the SEC into would-be lawbreakers in future is debatable.



Certainly, high-profile convictions in the past (hello Ivan Boesky) didn't do anything to stop the practice. And if I have to choose between outright greed and fear of punishment, I'll put my bet on greed every time.







At best, it will change the way hedge funds, research outfits and brokerages interact. That's already happening. Even a whiff of a regulatory problem is enough these days to drive a hedge fund to the brink.



But so few miscreants in the markets ever face serious charges, it's not surprising most people continue to believe the game is rigged. We've just come through the biggest financial debacle in modern history, involving some of the biggest names on Wall Street. Clients, including big pension funds and other institutional investors, lost millions because they did not get the high-grade investment products they thought they were paying for. Yet none of the heavyweights involved in these schemes has faced anything more than acute embarrassment or the occasional heavy cash outlay to settle SEC fraud charges without admitting guilt.



Heck, it took more than a decade and a market collapse to get Bernie Madoff and his vast Ponzi scheme. A whistle-blower who tried to get the SEC interested in the Madoff flim-flammery years earlier was given the brushoff.



A Manhattan prosecutor once told me that in complex securities fraud cases, his goal was to simplify things as much as possible for a jury lacking in financial sophistication. "If I don't keep things simple, I lose." Needless to say, the defence goal is exactly the opposite.



Getting caught in a criminal action through phone taps and the testimony of accomplices certainly helps any prosecution, as Mr. Rajaratnam can attest. And yet it still took the jury 12 days to reach a verdict.

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