* Rakoff rejects another SEC settlement
* Schottenfeld had agreed to pay about $763,000
* Accord part of insider trading probe centered on Galleon
By Jonathan Stempel
NEW YORK, April 5 (Reuters) - U.S. District Judge Jed Rakoff refused to approve an agreement by a trading company tied to the Galleon Group hedge fund insider trading case to pay about $763,000 to settle a U.S. Securities and Exchange Commission securities fraud lawsuit.
The refusal came six days after the trading company, Schottenfeld Group LLC, won approval from a different Manhattan federal judge, Richard Sullivan, to pay $1.21 million to settle a related SEC civil lawsuit.
It marks Rakoff's latest rejection of an SEC settlement to resolve fraud charges. Last September, he rejected a $33 million accord between the regulator and Bank of America Corp (BAC.N) over the Merrill Lynch merger. Rakoff in February approved a revised, $150 million accord.
Schottenfeld agreed in its second SEC settlement to pay a $230,238 civil fine, $460,475 of disgorged profits and $72,203 of interest. It also agreed to improve compliance procedures and hire an independent consultant.
In a two-page order, Rakoff said the settlement "does not appear unreasonable on its face" and is similar to the accord that Sullivan approved, but nonetheless said he "requires further information" before granting approval.
He demanded that the parties by April 12 provide more details on how the disgorgement was calculated, including on the alleged illegal trading profits and losses; more specifics about the improved compliance; and details on the timing and manner of appointing the consultant.
Kenneth Breen, a lawyer for New York-based Schottenfeld, declined to comment. SEC representatives did not immediately return requests for comment.
Former Schottenfeld traders Zvi Goffer, David Plate and Gautham Shankar are among 21 individuals to face criminal or civil charges or both in the hedge fund trading probe, which is centered on Galleon Group founder Raj Rajaratnam.
In November, the SEC accused the individuals of trading on inside information on such companies as Google Inc (GOOG.O) and Hilton Hotels Corp. Hilton is now controlled by private equity firm Blackstone Group LP (BX.N).
Rakoff is overseeing the SEC's civil lawsuit against Rajaratnam and other defendants. That case is scheduled for trial on Feb. 14, 2011.
The case is SEC v. Galleon Management LP et al, U.S. District Court, Southern District of New York, No. 09-08811. (Reporting by Jonathan Stempel; Additional reporting by Karey Wutkowski)