[JURIST] Galleon Group [partnership website] hedge fund founder Raj Rajaratnam [Financial Times profile] and former hedge fund consultant Danielle Chiesi were indicted [text, PDF; press release, PDF] Tuesday by a federal grand jury in Manhattan on insider trading charges. The 17-count indictment includes charges of conspiracy and securities fraud for their alleged role in the largest hedge fund insider trading case in US history. Rajaratnam has repeatedly denied any wrongdoing, promising to fight the charges. A lawyer for Chiesi, former hedge fund consultant to New Castle Partners LLC, said that she will also plead not guilty [WSJ report]. If convicted, Chiesi could face up to 155 in prison. Rajaratnam faces a sentence of up to 145 years. The indictment also seeks $20.8 million in forfeiture. The two are expected to be arraigned next week.

Rajaratnam and Chiesi were arrested in October and charged [complaint, PDF; press release] along with four other individuals and two business entities with insider trading. The complaint alleged that the individuals, including a managing director at Intel Corp., a director at McKinsey & Co., and a senior executive at IBM [corporate websites], provided Galleon Group and another hedge fund with material nonpublic information about several corporations upon which the funds traded, generating $25 million in illicit gain. The government of Sri Lanka has accused Rajaratnam of helping fund [Financial Times report] the Tigers of Tamil Eelam (LTTE) [JURIST news archive], a group designated as a terrorist organizations by several countries including the US. Although records show that Rajaratnam contributed money to the Tamil Rehabilitation Organization, a charity that the US claimed was a front for the LTTE, Rajaratnam denies funding the LTTE and has not been charged with funding the LTTE.