NEW YORK, N.Y. – A prosecutor tried to portray a stock trader and his brother, an imprisoned hedge fund owner, as close as twins Wednesday during opening statements in an insider trading trial, but a defence lawyer said they could not have been more different in how they plied their craft.
Assistant U.S. Attorney Christopher Frey pointed at the defendant, Rengan Rajaratnam, 43, as he accused him of teaming up with his brother, Raj, to cheat in the stock market in 2008 on the securities of two technology companies.
He promised jurors they would hear taped phone conversations between the brothers, “calls that provide a very revealing window into their corrupt relationship.”
Raj Rajaratnam is the founder of the Galleon Group of hedge funds and a onetime billionaire. He is serving an 11-year sentence for making up to $75 million illegally.
The charges against Rengan Rajaratnam are an extension of charges against his brother and two dozen defendants who pleaded guilty or were convicted in a prosecution in which the government touted its novel use of wiretaps to catch portfolio managers talking about their inside information.
Defence attorney Daniel Gitner said the government would be proven wrong.
He said the brothers were “very different people, led very different lives, lived in very different circles … and behaved very differently.”
Yet Frey promised to play tapes of conversations between the defendant and those providing him inside information as well as chats between the brothers.
“You’ll hear the men discuss the secret information they had obtained,” the prosecutor said.
He said the trades in one company’s securities earned Rengan Rajaratnam $100,000 in a personal account and hundreds of thousands of dollars for his brother’s Galleon Group hedge funds. Trades in another company earned another $40,000 for Rengan Rajaratnam, the prosecutor added.
Rajaratnam has pleaded not guilty to securities fraud charges. He won a victory in the case in May when the government dropped two of five charges against him. Charges of conspiracy to commit securities fraud and two counts of securities fraud remain.
After he was charged in the case last year, Rajaratnam came to the United States from Brazil, where he had been living.
He is accused in a civil complaint brought by the Securities and Exchange Commission of conspiring with his brother from 2006 to 2008 to indulge in insider trades that earned more than $3 million for him and for hedge funds he managed at his brother’s company and at Sedna Capital Management, a hedge fund advisory firm he co-founded.