Rajaratnam Jury Begins Deliberations in Insider TrialPatricia Hurtado
A federal jury in Manhattan began deliberating the fate of former hedge fund manager Rengan Rajaratnam, who’s accused of scheming to commit insider-trading with his brother, imprisoned hedge fund founder Raj Rajaratnam.
Rengan Rajaratnam, 43, is accused of conspiring with his older brother to get nonpublic information in 2008 to trade ahead of deals involving Advanced Micro Devices Inc. and Clearwire Corp. Raj Rajaratnam, the co-founder of Galleon Group LLC, was convicted of insider trading after a trial in 2011 and is serving an 11-year prison term.
An acquittal would be the first trial defeat for Manhattan U.S. Attorney Preet Bharara in a federal crackdown by his office and the Federal Bureau of Investigation on insider trading at hedge funds, technology companies and so-called expert-networking firms. At least 88 people have been charged since 2009 and 81 have been convicted, most after guilty pleas.
Phone conversations, secretly recorded by the U.S., between the two brothers provide evidence Rengan Rajaratnam knowingly entered into a scheme to get illegal tips obtained from his brother’s Rolodex of insiders, Assistant U.S. Attorney Randall Jackson told the jury in his closing argument yesterday.
In one wiretap, Raj discusses getting a tip from a business school classmate that Sunnyvale, California-based Advanced Micro Devices Inc. was getting a multibillion-dollar investment, according to prosecutors. Rengan, following up on the information, then phoned his older brother in July 2008 to tell him what he’d learned about part of the deal from one of his own classmates at Stanford Business School, according to prosecutors.
Rengan’s lawyer, Daniel Gitner, argued the government failed to prove its case and had merely sought to file insider-trading charges against his client because of evidence developed against his older brother. He said Raj Rajaratnam treated his client as the “emotionally abused younger brother” and manipulated Rengan into doing Raj’s bidding.
Rengan Rajaratnam worked his way up through Steven A. Cohen’s SAC Capital Advisors LP until he became a fund manager at Galleon Group. He conspired with his brother and two others: Anil Kumar, then a director at McKinsey & Co., and Danielle Chiesi, a securities analyst, according to prosecutors.
U.S. District Judge Naomi Reice Buchwald narrowed the case on July 1, dismissing two fraud counts related to trades. The jury was left to consider only a conspiracy charge, which has a maximum five-year prison sentence.
While Buchwald rejected Rengan Rajaratnam’s bid to exclude the wiretapped calls with his brother as evidence, she ruled that he could present an “innocent mindset” defense. Rengan Rajaratnam was living in Rio de Janeiro in March 2013 when he was charged by the U.S.
Husseni Rasiwala, who until last year shared an apartment with Rengan Rajaratnam in Brazil, testified he was there when Rengan learned he’d been indicted by a federal grand jury in New York.
“‘I am innocent, this is about my brother, not me. I want to go back and clear my name,’” Rasiwala cited Rengan as saying.
The 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. Rajaratnam, 13-cv-01894, Southern District of New York (Manhattan).