Several major companies, including Goldman Sachs Group Inc, McKinsey & Co and Intel Corp may be subjected to lawsuits, or suffer injury to their reputations as witnesses take to the stand at the trial of Raj Rajaratnam, 52, co-founder of Galleon Group LLC, for trading on tips which he received from these firms and others.
If Rajaratnam, billionaire native of Sri Lanka is convicted by a Manhattan jury he may face a jail sentence of at least 10 years if US prosecutors get their way. Other companies who may also be named are Morgan Stanley, IBM, and Moody’s Investors Service Inc.
The companies are worried that they may be asked to come to court to explain how sensitive information came to be in the hands of traders at Galleon. Despite the fact that one employee acting unethically by divulging privileged information would not justify a lawsuit, any proof or evidence that executives at a firm purposefully leaked data to certain traders with the intention of manipulating share prices could indeed be grounds for a lawsuit, according to Mark Rifkin, a New York based lawyer who represents investors.
“If a company made a decision for whatever reason that it wanted to make information available to select individuals, that in my opinion would be unlawful,” said Rifkin, of Wolf Haldenstein Adler Freeman & Herz LLP, in an interview. “We’re paying close attention to the entire insider trading case as it unfolds because you never know what’s going to happen.”
Evidence of unlawful disclosures may be more than “just embarrassing” to companies that are required to guard against such leaks, said Ronn Torossian, Chief Executive Officer of 5W Public Relations LLC in New York.
Ronn Torossian is president and CEO of 5WPR, one of the 20 largest independent PR firms in the U.S. Named to the “40 Under 40″ by PR Week & Advertising Age, Ronn Torossian was a semi-finalist for the Ernst & Young 2010 Entrepreneur of the Year Award.. He may be reached at http://www.ronntorossianupdate.com.
Ronn Torossian on Rajaratnam Trial