Galleon, Raj Rajaratnam Sued by Younger Brother Rengan for $13.5M

Oct 15 2015 | 11:40pm ET

Raj Rajaratnam, the Galleon founder convicted of insider trading in 2011, has been sued by his younger brother Rengan for $13 million in allegedly unpaid commissions and legal fees. 

Galleon was also named in the suit, which was filed yesterday in New York. The action claims Galleon failed to pay Rengan Rajaratnam 2009 commissions of $8.3 million on the trading profits he made for the hedge fund while a portfolio manager. The lawsuit contends Rengan had an arrangement to be paid 10% commission on profits he generated, but Galleon officials gave him false revenue information and documents.

The suit also claims Galleon did not pay him up to $1 million for stock recommendations he made as an analyst, and did not advance his legal costs while defending his own insider trading case. Legal fees for his defense could top $4 million, the suit says, not including the $840,000 civil settlement he reached with the SEC in which he did not admit to any wrongdoing. 

Rengan Rajaratnam was acquitted of criminal insider trading charges last year, the first – and to date only – insider trading trial loss suffered by Manhattan U.S. attorney Preet Bharara during his crackdown on the practice following the financial crisis. Nearly 100 individuals have been indicted since then, with 87 convictions. 

Lawyers for Raj Rajaratnam and Galleon did not respond to requests for comment Thursday, according to Reuters.

Galleon was shuttered in 2009 amidst the charges against Raj Rajaratnam. He was found guilty in 2011 of engaging in an insider-trading scheme that ultimately resulted in nearly $64 million in ill-gotten gains, and is currently serving an 11-year prison sentence.  

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