Ex-hedge fund manager Rengan Rajaratnam’s reaction to his indictment for insider trading was to proclaim his innocence to friends in Brazil and return to the U.S. to fight the charges, they testified.
Husseni Rasiwala, who until last year shared an apartment with Rajaratnam in Rio de Janeiro, told jurors that he was with his roommate on March 21, 2013, when lawyers told Rajaratnam he had been indicted. The fund manager immediately began making plans to return to New York, Rasiwala said.
“He said he was innocent, he wanted to come back and take it to court,” Rasiwala testified yesterday in Manhattan federal court.
Rajaratnam, the younger brother of jailed Galleon Group LLC co-founder Raj Rajaratnam, is on trial for conspiring to use illegal tips passed from his big brother in 2008. Defense lawyers summoned Rasiwala to the witness stand to support their claim that Rengan Rajaratnam’s voluntary return demonstrates he believed he’d done nothing wrong.
Another friend, Sanjay Agarwal, told jurors that Rajaratnam showed him an online news account of his indictment about that time and was agitated by the allegations.
“He said, ‘They’re coming after me and I haven’t done anything wrong,’” said Agarwal, who testified Rajaratnam told him, “I have to go and prove my innocence.”
Rajaratnam returned to the U.S. within days of his indictment. He faces a single count of conspiracy, which carries a maximum prison term of five years. The judge on July 1 dismissed two counts of securities fraud.
Raj Rajaratnam was convicted of insider trading after a trial in May 2011 and is serving an 11-year prison term.
Rengan Rajaratnam’s lawyers, who said they may conclude their case July 7, also called Luke Sito, a former analyst who worked for him at Galleon and at Sedna Capital Management LLC, a hedge fund Rajaratnam co-founded in 2004.
Sito testified yesterday that Rajaratnam was careful when speaking to insiders at technology companies to advise them not to disclose inside information.
“At the beginning of every meeting or every phone call he would say, ‘We’re not interested in material nonpublic information,’” Sito said. “That was a disclosure he made on every single call and every single meeting.”
Assistant U.S. Attorney Randall Jackson asked Sito whether he wrote a letter supporting Raj Rajaratnam in 2011. Buchwald had ruled Jackson couldn’t elicit from Sito that the letter was written to the judge who sentenced Rajaratnam.
“I supported him,” Sito said. “He crossed the line when it came to insider trading, but he donated a ton of money to charity. Galleon was known as the United Nations of hedge funds, up and down Wall Street. You had a Pakistani guy sitting next to an Indian guy. He gave a little guy like me a chance.”
The case is U.S. v. Rajaratnam, 13-cr-00211, U.S. District Court, Southern District of New York (Manhattan).