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Former hedge fund founder Raj Rajaratnam leaves court after he was convicted on all counts of fraud and conspiracy in Wall Street's biggest insider trading trial for years, in New York, on May 11, 2011. - 

Kai Ryssdal: Federal prosecutors threw a rare shutout against Wall Street today. A jury in Manhattan has convicted the billionaire hedge fund manager Raj Rajaratnam on all 14 counts of securities fraud and conspiracy. In simpler terms: insider trading. Rajaratnam was accused of making more than $60 million by trading with privileged information. In simpler terms: illegally.

It wasn't all that long ago that powerful Wall Street types like Rajaratnam brushed off threats from the Justice Department and the SEC. But apparently no more. Our New York bureau chief Heidi Moore reports.

Heidi Moore: We all know from watching cop movies that it's great to catch a criminal before he gets away -- but it's even better to catch him in the act. Today's conviction of Raj Rajaratnam shows that the government's use of wiretaps has launched it beyond small-time players in the stock market.

Anthony Barkow: They get a lot of small fish in the traditional insider trading context. And here with wiretap information they were able to flip cooperators to testify against the person at the top of the hierarchy.

That's Tony Barkow. He's a former federal prosecutor who now teaches at New York University's Law School.

But wiretaps aren't the only thing that has changed. A few years back, the SEC created a kind of SWAT team to examine insider trading. It also beefed up with a herd of aggressive former prosecutors. Most importantly, the SEC, the Department of Justice and the FBI worked together to infiltrate Rajaratnam's hedge fund. Here's Barkow again.

Barkow: It kind of like a web. Kind of like a social network in a lot of ways, like who's talking to who, who knows who?

Hedge fund managers will have to rethink who they trust, says Bill Currier. He used to be with the SEC and now he's at law firm White & Case.

Bill Currier: The message that the U.S. attorney's office and the SEC want to be received by this verdict is beware if you're intent on engaging in this activity; you might be talking to someone who is wearing a wire and is cooperating with the authorities.

Rajaratnam has vowed to appeal his conviction. But in the meantime, he's wearing a government wire of his own -- an electronic monitoring device.

In New York, I'm Heidi Moore for Marketplace.

Follow Heidi N. Moore at @moorehn