An insider-trading lawsuit filed by the U.S. Securities and Exchange Commission against Rengan Rajaratnam, the younger brother of imprisoned hedge-fund founder Raj Rajaratnam, was put on hold by a federal judge in New York.
U.S. District Judge John Koeltl in Manhattan today granted a request by Rengan Rajaratnam’s lawyer, Vinoo Varghese, for a six-month adjournment in order to review how a separate criminal case would proceed. U.S. District Judge Naomi Reice Buchwald, who’s presiding over the criminal case, set a June 6 conference, Varghese told the judge at the hearing.
After John Henderson, a lawyer for the SEC, told Koeltl today that the commission didn’t object to the delay, the judge adjourned the SEC case to Nov. 8. A letter sent by Varghese to the judge requesting the delay hasn’t been publicly filed.
“We sought a stay because the criminal case takes precedence and he has to devote his resources to it,” Varghese said in an interview after court. “He’s a small guy, not like his brother. He doesn’t have a legion of attorneys and has to focus all of his efforts on the criminal matter.”
Rengan Rajaratnam, who worked for the hedge fund his brother co-founded, Galleon Group LLC, was charged in March by federal prosecutors in Manhattan accused of conspiring with his brother to trade on material nonpublic information about Clearwire Corp. and Advanced Micro Devices Inc. in 2008. Federal prosecutors say he made almost $1.2 million on the scheme.
The SEC alleges in its complaint the Rajaratnam brothers conspired in an insider trading scheme that reaped more than $3 million in illicit gains for Galleon and Sedna Capital Management LLC, a New York-based hedge fund which Rengan co-founded. Rengan has pleaded not guilty to the criminal charges.
Raj Rajaratnam is serving an 11-year prison sentence after being convicted on 14 counts of conspiracy and securities fraud in 2011 in the largest crackdown on insider trading at hedge funds in U.S. history.
The criminal case is U.S. v. Rajaratnam, 13-cr-00211, U.S. District Court, Southern District of New York (Manhattan); the civil case is SEC v. Regan Rajaratnam, 13-cv-01894, Southern District of New York (Manhattan).