Rajaratnam Brother Cleared Of Insider Trading

Jul 9 2014 | 9:30am ET

The younger brother of Galleon Group founder Raj Rajaratnam will not suffer the same fate as his brother, after a jury acquitted him of insider-trading yesterday.

It took the jury just four hours to break an 81-conviction winning streak built up by federal prosecutors in New York over the past five years, and clear Rengan Rajaratnam of the single count remaining against him: conspiring with his brother to illegally trade shares of a technology company.

In many ways, the government’s crackdown on insider-trading began and ended with the younger Rajaratnam: It was a tip about him in 2007 that got the probe started in earnest and that wound up netting the convictions of his brother and 80 others since October 2009. But prosecutors’ case against Rengan Rajaratnam was always somewhat thin. Initially slapped with seven counts of fraud and conspiracy when he was arrested in 2013, Rajaratnam saw the case against him dwindle as prosecutors—prodded by U.S. District Judge Naomi Reice Buchwald—dropped four of the counts before the trial even began. Buchwald herself tossed the remaining fraud charges after prosecutors closed their case.

Prosecutors spent much of their time building a case against Raj Rajaratnam, who is serving an 11-year prison sentence, hoping jurors would draw a line between the brothers. The strategy may have backfired, with one juror telling Reuters, “We felt like a lot of the trial was about Raj. We were waiting to hear more about Rengan, who was the actual person on trial. By the end, we were all like, ‘Where’s the evidence?’”

Another told The Wall Street Journal, “I think there was an element of retrying Raj Rajaratnam instead of Rengan.” The juror, literary agent Miriam Goderich, called the evidence “so underwhelming that you couldn’t convict.” The forewoman, history professor Isabel Tirado, was just as blunt: “There was no evidence, period.”

U.S. Attorney Preet Bharara said he was “disappointed with the verdict.”

Rengan Rajaratnam, who worked with his brother at Galleon both before and after starting his own hedge fund, Sedna Capital Management, returned to the U.S. from Brazil to face the charges. After he was acquitted, Buchwald told him he can now return for the World Cup finals, scheduled for Sunday.

“Absolutely,” Rajaratnam, who still faces a Securities and Exchange Commission lawsuit, said.


In Depth

Exotic Assets: Investing In Rare Violins

Jan 17 2017 | 4:43pm ET

By definition, alternative investments include exotic assets far beyond your typical...

Lifestyle

'Tis the Season: Wall Street Holiday Parties Back In Fashion

Dec 22 2016 | 9:23pm ET

Spending on Wall Street holiday parties has largely returned to pre-2008 levels...

Guest Contributor

The Trump Administration: What It Could Mean for Carried Interest

Jan 19 2017 | 5:25pm ET

The arrival of the Trump administration brings the potential for a repeal of the...

 

From the current issue of

Often seen as a passion project, or part of a philanthropic venture, rare and fine stringed instruments offer an exciting option to diversify one’s investment portfolio while providing an opportunity for an exceptional long-term investment.