Rajaratnam’s brother in plea talks over insider charges

•  Rengan Rajaratnam charged with fraud, conspiracy
• Older brother Raj  Rajaratnam serving 11-year prison term

By Jonathan Stempel

Reuters: Rengan Rajaratnam, the younger brother of imprisoned hedge fund manager Raj Rajaratnam, is negotiating with prosecutors on a possible resolution to his criminal insider trading case, including a possible plea, a court filing shows.

The US District Judge Naomi Reice Buchwald in Manhattan agreed to delay a scheduled conference to 30 July from 4 June, which federal prosecutors in a 30 May letter said would “Permit the defendant and the Government to continue discussions that may lead to the resolution of this case before trial.”

Prosecutors said they had already provided trading records, wiretap transcripts and other ‘significant’ evidence to Rengan Rajaratnam ‘to facilitate plea discussions’, and that both sides “Agree that it would be very helpful to have additional time for these discussions.”

The Government said the delay would also give the defence more time to review evidence it has already received. A lawyer for Rengan Rajaratnam, Vinoo Varghese, had no immediate comment. A spokeswoman for US Attorney Preet Bharara in Manhattan declined to comment.

Prosecutors had accused Rengan Rajaratnam of conspiring with his brother to trade illegally in the stocks of technology companies Advanced Micro Devices and Clearwire Corp., in 2008, resulting in US$ 1.2 million of illegal profit.

Rengan Rajaratnam pleaded not guilty on 25 March, entering his plea after voluntarily returning to the United States from Brazil, where he had lived and worked for the prior year. He was freed on US$ 1 million bond and surrendered his passport. The defendant is a US citizen born in Sri Lanka.

Rengan Rajaratnam, whose full first name is Rajarengan, had been a portfolio manager at his brother’s hedge fund firm Galleon Group. He also faces separate US Securities and Exchange Commission civil charges.

Prosecutors have charged close to 80 people and won convictions or guilty pleas on more than 70 in an insider trading probe that was unveiled in October 2009 and which has focused on hedge fund employees and corporate executives.

Raj Rajaratnam is serving a 11-year prison sentence. Former McKinsey & Co. consulting firm chief and Goldman Sachs Group Inc. director Rajat Gupta was sentenced to two years in prison for passing tips to Raj Rajaratnam. Both are appealing their convictions. The cases are US v. Rajaratnam, US District Court, Southern District of New York, No. 13-cr-00211; and SEC v. Rajaratnam in the same court, No. 13-01894.