Galleon figure Chiesi stands by Rajaratnam

Danielle Chiesi, who is charged with conspiracy and securities fraud in connection with the $21 million Galleon Group hedge-fund insider trading case, arrives at a U.S. Court in New York in this December 21, 2009 file photo.

NEW YORK (Reuters) - Danielle Chiesi has not found it easy to keep quiet in the months since her indictment as part of the biggest insider trading case to rock Wall Street in two decades.

The former hedge fund analyst told Reuters she has been stung by the unflattering portrayal of her in numerous press reports since her October 16 arrest.

The 44-year-old former New Castle Funds portfolio manager said she has been unfairly depicted as a foul-mouthed Wall Streeter who flirted with executives at technology companies to get them to talk to her.

Chiesi, who has pleaded not guilty to 17 counts of securities fraud and related charges, said she has done nothing wrong and will be vindicated at trial. She said her co-defendant Raj Rajaratnam, the billionaire co-founder of Galleon Management, is also innocent.

"There is not even a chance we will do one day in jail," Chiesi said in a recent telephone interview. "We didn't do anything wrong."

She said she considers Rajaratnam a good friend and it is "an honor and a privilege" to stand next to him in court. She and Rajaratnam are due back in court on February 11.

In an indictment handed down by a federal grand jury, Chiesi is accused of getting inside corporate information from executives at tech companies like International Business Machines Corp and Akamai Technologies Inc and sharing those tips with Rajaratnam and other hedge fund traders.

FORMER HIGH SCHOOL BEAUTY QUEEN

Chiesi, known as Dani to her friends, is one of just two women charged in the sprawling case. The other is Roomy Khan, a former hedge fund consultant who once worked for Galleon. Khan pleaded guilty and is cooperating with federal prosecutors.

In all, prosecutors have lodged charges against 21 people; eight have pleaded guilty. One defendant, Rajiv Goel, a former Intel Corp executive, has indicated in court papers that he may waive indictment and plead guilty, possibly as soon as today.

So far, Rajaratnam is the biggest name in the continuing investigation. But Chiesi, a former high school beauty queen, has grabbed almost as much attention, in part because she is a woman operating in a largely male-dominated industry.

In court filings, Chiesi has emerged as one of the more colorful defendants in the case because of her propensity to use profanity. The initial criminal complaint against her contains lengthy excerpts of her phone conversations that were secretly recorded by federal authorities.

Some in the securities business have criticized Chiesi for wearing short skirts and low-cut blouses to tech industry conferences and have accused her of flaunting her sexuality to cozy up to company executives.

But others who know her say such criticism is unwarranted and that it is the kind of thing that is often said about hard-nosed women who work on Wall Street, especially in the rough-and-tumble hedge fund universe.

'CHECK SIX'

For her part, Chiesi has been longing to set the record straight. Yet she was wary of saying too much and has been warned by her lawyer, Alan Kaufman, not to talk to reporters. Kaufman declined to comment.

Chiesi would not discuss the many hours of taped conversations prosecutors intend to use as evidence against her. She also would not comment on the decision by Mark Kurland, her former boss at New Castle, to plead guilty.

Federal authorities allege that an inside tip Chiesi got from an unidentified friend at Akamai resulted in a trade that generated a gain of more than a $2 million for New Castle, once a $1 billion fund and formerly affiliated with Bear Stearns.

But Chiesi said she and Rajaratnam "didn't hurt anybody." She said Rajaratnam "is the most generous man in the world."

She said she and Rajaratnam used to joke that trading was such a dog-eat-dog business they needed to always "check six," a phrase fighter pilots use about the need to watch their backs.

"When you are flying you always check six. You check to see if your enemy is behind you," said Chiesi.

She declined to say who she and Rajaratnam viewed as their "enemy." But she quipped, given her current situation, "Apparently, we have a lot of them."

(Reporting by Matthew Goldstein; editing by John Wallace)