Rajaratnam Paid For Tips, Faces New Charges, Prosecutors Say

Jan 6 2010 | 12:32pm ET

Galleon Group founder Raj Rajaratnam paid tipsters for insider information, prosecutors said yesterday, adding that the billionaire hedge fund honcho faces new insider-trading charges.

Prosecutors leveled the new allegations in an effort to keep a judge from reducing Rajaratnam’s record $100 million bail to $20 million. They said that Rajaratnam made more money, and traded illegally for a longer period of time, than indicated in the original indictment. Instead of $17 million, authorities now say Rajaratnam’s participation in an alleged insider-trading circle netted him $19 million. What’s more, prosecutors say they have uncovered evidence that Rajaratnam paid for a tip in 2006, the first time they have accused him of doing so.

According to prosecutors, Rajaratnam began making “large payments in exchange for inside information in or about 2004.”

The new charges could put Rajaratnam, who has pleaded not guilty to the 17 counts already laid against him, in prison for more than 15 years.

According to prosecutors, Rajaratnam made a large payment to an unidentified source for information about Advanced Micro Devices’ impending acquisition of ATI Technologies. Rajaratnam’s lawyer, John Dowd, dismissed the new allegations, noting that “an analyst’s prediction that AMD would acquire ATI was widely reported in the press more than seven weeks before the acquisition was announced.”

Prosecutors said they would file a superseding indictment to include their ATI allegations.

A hearing is scheduled for Friday to consider Rajaratnam’s request for lower bail. But in addition to the new charges planned, prosecutors say that Rajaratnam has ample means to flee, including as much as $35 million stowed in bank accounts in his native Sri Lanka.

To date, 21 people have been charged in the Rajaratnam insider-trading case, and six have pleaded guilty. A seventh guilty plea seems probable from Anil Kumar, a former senior partner at McKinsey & Co., as prosecutors have indicated they will file a “criminal information” against him, generally used in plea deals. Kumar is alleged to have passed information on several McKinsey clients, including AMD, to Rajaratnam.


In Depth

Creating An Offshore Hedge Fund Dream Team: The Seven Key Players

Jun 26 2015 | 6:47am ET

If you want to set up an offshore hedge fund, like any great team, you’re only...

Lifestyle

Hedgies Set to Compete in Wall Street Decathlon

Jun 8 2015 | 12:37am ET

The Wall Street Decathlon — a 10-event physical challenge that will crown “Wall...

Guest Contributor

6 Essential Principles To Balance Your Investment Risk

Jun 26 2015 | 10:07am ET

In this article, financial expert Greg Silberman explores how to hedge a private...

 

Editor's Note