CommCore Blog and News

The Rage over Raj: How Will the Verdict Play?

From a PR and corporate communications perspective, the highly-touted insider trading verdict against Galleon Group hedge fund founder Raj Rajartnam ( already seems to be having a ripple effect far beyond Rajartnam and hedge funds. It is making waves in all aspects of the financial services industry, as well as for prosecutors and investigators charged with rooting out financial malfeasance.

Being found guilty on 14 counts raises Rajartnam”s “Black Hat” profile to those of the very real Bernie Madoff and the fictitious Gordon Gekko, and further tars the image of an already tarnished financial sector. Regardless of the outcome of his likely court appeal, the conviction of a man worth more than $7 billion has already brought predictably disgusted blog comments such as, “When is $1 billion not enough?” and “The whole system is broken. You can’t trust anyone who touches on banks or Wall Street any more.”

But impressive as the verdict is, some are already asking much more penetrating questions about its meaning. Some commentators are wondering if the Rajartnam verdict isn’t a misdirection play by both investigators and Wall Street:

Says filmmaker Charles Ferguson whose “Inside Job” won the 2011 Academy Award for best documentary: “The Justice Department has yet to bring criminal charges against an executive who ran a major financial-services firm leading up to the disaster, which was caused by aggressive risk taking and shoddy lending practices. The total amounts of money and the consequences in insider trading are trivial compared to the damage caused by the behavior that caused the financial crisis.”

The fallout from this verdict may be tangled in a more complex web than most crises given the wide impact of the ongoing financial meltdown on the national and global economies, employers, individual investors, the entire financial sector, political leaders, and government regulators and prosecutors.

From a communications perspective, how do you see the Galleon verdict playing out in the media, in the financial services industry, and with the public?