Ex-Galleon Trader Expected To Headline Rajaratnam Trial's Fourth Week

Mar 28 2011 | 1:26am ET

As Galleon Group founder Raj Rajaratnam's insider-trading trial enters its fourth week, prosecutors are set to call their third key cooperating witness, a former employee of the former hedge fund billionaire.

Adam Smith, a one-time portfolio manager at Galleon, is expected to follow fellow cooperators Anil Kumar and Rajiv Goel to the stand this week. Smith is expected to tell jurors that he got inside information about several companies from a former Morgan Stanley colleague that he both traded on and shared with his former boss, Rajaratnam.

The Morgan Stanley banker in question is Kamal Ahmed, who has not been charged with any wrongdoing but is currently on leave from Morgan Stanley while the firm conducts an investigation. Ahmed is alleged to have passed information about at least two impending mergers, including Advanced Micro Devices' acquisition of ATI Technologies in 2006.

In a recorded conversation from 2008 played earlier in the trial, Smith is heard telling Rajaratnam, "I talked to Kamal last night" about a deal involving Vishay Intertechnology that never came to fruition.

Smith, who pleaded guilty to insider-trading charges in January, has also admitted to illegally trading the shares of two other technology companies.

Rajaratnam's lawyers said last week that they want to use a wiretap from January, on which Smith is heard attempting to elicit information from another former Galleon trader, to discredit him. Prosecutors oppose that request.

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