Rajaratnam’s brother seeks dismissal of insider trading charges

Tuesday, 11 February 2014 00:01 - - {{hitsCtrl.values.hits}}

REUTERS: Rengan Rajaratnam, the younger brother of imprisoned hedge fund manager Raj Rajaratnam, urged a US judge on Friday to dismiss insider trading charges levelled against him last year. In a motion filed in US District Court in New York, his lawyers argued the Government had taken positions in the indictment that contradicted positions prosecutors took in trying his older brother for insider trading. “Principles of fairness dictate that Rengan, at a minimum, should be tried under the same standard as Raj,” the defence lawyers wrote in the motion.

A spokeswoman for US Attorney Preet Bharara in Manhattan declined to comment. The case is one of a wave of insider trading prosecutions pursued by Bharara’s office, resulting in 79 convictions since October 2009. Raj Rajaratnam, the founder of the hedge fund Galleon Group, received an 11-year prison sentence in October 2011 after a jury convicted him charges related to insider trading. A grand jury subsequently indicted Rengan Rajaratnam, a former portfolio manager at Galleon, in March 2013 on seven counts of conspiracy and securities fraud. The indictment charged that Rengan Rajaratnam, 43, had conspired with his older brother to trade on non-public information related to technology companies Advanced Micro Devices Inc and Clearwire Corp in 2008, resulting in almost $ 1.2 million in profits. In court papers Friday, Rengan Rajaratnam’s lawyers contended the indictment failed to allege that he knew that two alleged tippers of inside information received a personal benefit in exchange for providing tips to Raj Rajaratnam. Those tippers were Rajiv Goel, an employee of Intel Corp who admitted to passing a tip to Raj Rajaratnam, 56, about the company’s plans to invest in Clearwire, and Anil Kumar, a former McKinsey Director who said he tipped the Galleon founder about AMD. Both Goel and Kumar received probation in 2012 after pleading guilty and agreeing to cooperate with the investigation. Rengan Rajaratnam’s lawyers said their client was allowed to trade on confidential information unless he knew a tipper disclosed it for a personal gain. Allowing the indictment to stand without any allegation that Rengan Rajaratnam himself knew the tippers were benefiting from providing confidential information would be “unjust,” the lawyers say, since such proof was required at trial in the case of Raj Rajaratnam. Trial in Rengan Rajaratnam’s case is scheduled for 17 June. His lawyer did not respond to a request for comment. A federal jury on Thursday found Mathew Martoma, a former portfolio manager at SAC Capital Advisors, guilty of engaging in an insider trading scheme that enabled the hedge fund to make profits and avoid losses of $ 275 million. Separately Friday, US District Judge Paul Gardephe scheduled the sentencing for Martoma, 39, for June 10. Martoma faces a maximum of 45 years in prison. The cases are US vs. Rajaratnam, US District Court, Southern District of New York, No. 13-cr-00211; and SEC vs. Rajaratnam in the same court, No. 13-01894.