Manhattan: The US narrowed its case against Rengan Rajaratnam, the brother of convicted hedge fund manager Raj Rajaratnam, limiting the scope of insider-trading charges to trades he allegedly made for his own account.
Prosecutors eliminated four of the seven criminal counts they filed against Rengan Rajaratnam last year, in a revised indictment made public on Saturday in Manhattan federal court. The government said this month it would drop two of the counts, which accused Rajaratnam of aiding trades by his brother, after US District Judge Naomi Reice Buchwald said she might throw them out.
Rengan Rajaratnam is scheduled to begin trial 17 June on charges that he conspired with Raj Rajaratnam and others and used inside information to buy shares of Clearwire Corp. stock in March 2008. Raj Rajaratnam, co-founder of Galleon Group LLC, is serving an 11-year prison sentence for insider trading.
In addition to dropping the two counts connected to his brother’s trading, the government abandoned two charges relating to trades in Clearwire made on behalf of a Galleon fund that was managed by Rengan Rajaratnam. He now faces a single conspiracy count and two counts of securities fraud alleging he made illegal Clearwire trades for his own Fidelity Investments brokerage account.
The securities-fraud charges each carry a maximum penalty of 20 years in prison.
Prosecutors in the office of Manhattan US attorney Preet Bharara have charged 86 people with insider trading since August 2009, including the two Rajaratnams. Of that number, 80 have been convicted, most of them after pleading guilty. None of the people charged has been acquitted at trial.
James Margolin, a Bharara spokesman, declined to comment on the decision to narrow the charges against Rengan Rajaratnam.
Former SAC Capital Advisors LP hedge fund manager Michael Steinberg was sentenced today to 3-1/2 years in prison for insider trading. Bloomberg
