Earlier this week, a federal jury in Manhattan found Rengan Rajaratnam not guilty of conspiracy and securities fraud charges. Rengan is the younger brother of Raj Rajaratnam, who is the co-founder of Galleon Group LLC and is serving an eleven year sentence in prison after being convicted in October 2011 of an insider trading scheme that resulted in $63.8 million in illicit profit. Rengan worked for his brother as a portfolio manager at Galleon and in March of last year was charged with seven counts of conspiracy and fraud charges.
According to federal prosecutors, Raj received insider information from Rajiv Goel and Anil Kumar regarding the stock of Clearwire Corp. and Advanced Micro Devices. Subsequently, Raj passed that information on to Rengan, who traded on the information in his personal brokerage account at Fidelity Investments and other Galleon Group funds.
The younger Rajaratnam was living in Brazil when he learned of the indictment. After the jury returned its verdict, U.S. District Judge Naomi Reice Buchwald in referencing the World Cup told him that he could “go back to Brazil for the finals,” to which Rajaratnam replied, “Absolutely.”
Rajaratnam’s acquittal snaps a five-year winning streak by U.S. prosecutors. Previously, Manhattan U.S. Attorney Preet Bharara’s office had initiated a crackdown on insider trading, leading to convictions of eighty-one defendants without an acquittal since October 2009. After the trial, Bharara stated that he was disappointed with the verdict but respected the jury trial system regardless of the outcome.
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