Raj Rajaratnam, the authorities say, masterminded one of the biggest insider-trading schemes in a generation. But if Rajaratnam was trading on insider information, apparently he was not very good at it. A close examination of the trades that led to his arrest last week reveals a startling fact: In all, Rajaratnam lost millions from what prosecutors characterise as illegal trading.

One bad trade, in the shares of chip maker Advanced Micro Devices, cost his hedge fund, the Galleon Group, $30 million. That loss more than wiped out the profits that prosecutors claim Rajaratnam and his accomplices reaped with their scheme.

Prosecutors highlighted the winning trades in a case that they say stretched from the secretive world of hedge funds to some of the country’s biggest technology companies. They did not mention the losers. Profitable or not, insider trading is insider trading. And Rajaratnam, who maintains he is innocent, might have broken the law even if he lost money on his trades.

But the fact that some of the investments soured, and that, in all, Rajaratnam lost money, could be powerful evidence for defendants. Inside information is, by definition, information that is material to investors, and thus could cause a company’s stock to move in a direction that will be obvious in advance.

For example, if a company’s stock is trading at $75 and someone learns that the company will be taken over for $100 a share, that information would be material. But routine corporate news is generally not considered material.

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