After eight weeks of trial, and another 12 days of deliberations, the jury in the insider trading case against Raj Rajaratnam, co-founder of the Galleon Group hedge fund, finally returned its verdict: guilty on all fourteen counts. There are two lessons in this conviction, neither of which are the ones prosecutors hoped to send. First, although the case will generate publicity and chest-beating about insider trading, it ultimately will provide a “road map” for anyone looking to profit by trading on insider tips. Second, and even more troubling for regulators, the case illustrates how the government’s approach to insider trading is illogical and bad policy.

The initial, short-term reaction from traders and Wall Street will be visceral fear and worry about jail time. The next insider trading case, against ex-Galleon trader Zvi Goffer, is scheduled to begin next week. Prosecutors have 60 wiretap recordings of Mr Goffer, even more than they had of Mr Rajaratnam.

And the prosecutions won’t end there. Dozens of informants related to Galleon have pled guilty and are cooperating with the government. All of this seems scary. It’s enough to make a hedge fund manager afraid to use the phone.