Brother of imprisoned hedge fund manager pleads not guilty to insider trading News
Brother of imprisoned hedge fund manager pleads not guilty to insider trading
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[JURIST] Rengan Rajaratnam, younger brother to former Galleon Group hedge fund manager Raj Rajaratnam [JURIST news archive], on Monday pleaded not guilty to charges of conspiring with his brother to trade on non-public information concerning Clearwire Corporate [website] and Advanced Micro Devices Incorporated [corporate website] in 2008. Rengan was charged with six counts of securities fraud and one count of conspiracy, and also faces separate Securities and Exchange Commission (SEC) [official website] civil charges alleging a broader scheme following trades on stocks including Polycom Inc [corporate website] and Hilton Hotels. Rengan entered his plea [Reuters report] in the US District Court for the Southern District of New York [official website], where his trial will begin on June 4.

Raj Rajaratnam’s case has been called the largest hedge fund insider trading case in US history, and his sentence is the longest term ever imposed for insider trading. The 11-year sentence [JURIST report] was significantly lower than the 24 1/2-year sentence requested by prosecutors and less than the 19 1/2-year minimum indicated by the non-obligatory federal sentencing guidelines. Calling his crime an assault on free markets and a virus in business culture in need of eradication, Judge Richard Holwell cited Rajaratnam’s charitable financial help for victims of the tsunami in Sri Lanka, the earthquakes in Pakistan and the 9/11 attacks, as well as his impeding kidney failure due to advanced Type II diabetes as reasons for the comparatively lenient sentence. Several other defendants have pleaded guilty in connection with the case. Danielle Chiesi pleaded guilty [JURIST report] in January 2011. Former IBM senior vice president Robert Moffat was sentenced to six months in prison in September 2011 and ordered to pay a $50,000 fine for his role in the scheme after pleading guilty [JURIST reports] in March 2010. Former Intel Capital executive Rajiv Goel pleaded guilty [JURIST report] to insider trading charges in February 2010. Rajaratnam, Chiesi, Goel and Moffat were arrested in October 2009 and charged along with two other individuals and two business entities with insider trading. The complaint alleged that the individuals 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.

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