NEW YORK (Reuters) - Traders are betting there is a 90 percent chance that hedge fund manager Raj Rajaratnam will be found guilty of insider trading when the jury returns its verdict in the high-profile Wall Street trial.
As of Friday, traders on Dublin-based predictive market Intrade were heavily favoring a guilty outcome on at least one of the charges facing the Galleon Group founder, charged in connection with a massive probe by U.S. prosecutors into alleged insider trading at hedge funds like Galleon.
The jury in the seven-week-old trial completed a fifth day of deliberations on Friday without reaching a verdict in Wall Street’s biggest insider trading case in two decades.
Intrade, which allows traders to bet on events ranging from presidential primaries to the winner of American Idol, launched speculative contracts on Rajaratnam’s fate on Wednesday. The odds have held steady at 90 percent since.
The trading in Rajaratnam verdict contracts is relatively modest compared to more popular bets such as whether a Republican party candidate will win the presidential election in 2012.
If Rajaratnam is found guilty on at least one of the 14 counts of securities fraud and conspiracy he faces, traders can settle the contracts they bought -- currently at approximately $9 a share -- for $10. If he is not found guilty on any charge, traders holding the contracts will receive nothing.
Intrade allows traders to place bets on the outcome of high-profile legal proceedings like former baseball star Roger Clemens’s coming trial on charges he lied to Congress about steroid use, or the likelihood that the U.S. Supreme Court will rule on an appeal in healthcare reform challenges before 2014.
In some cases the site has been spot-on, correctly predicting in May 2010 that President Barack Obama would tap then-U.S. Solicitor General Elena Kagan to fill a Supreme Court vacancy.
However, it has not always been able to capture the likelihood of curve balls such as President George W. Bush’s pick of John Roberts for chief justice of the United States Supreme Court. Until about two hours before the nomination, U.S. 5th Circuit Court of Appeals Judge Edith Clement was the odds-on favorite in betting on TradeSports, now a part of Intrade.
Reporting by Jessica Dye; Editing by Howard Goller