* Former Galleon employee Adam Smith testifies at trial
* Smith says he got inside details about Intersil results
* Smith tells jurors of pressure to get "edge" in trades
By Basil Katz
NEW YORK, March 29 A former portfolio manager
at Raj Rajaratnam's Galleon Group described pressure at the
hedge fund to get "an edge" in stock trades and said he passed
on secret details about companies to his boss.
"Research is sort of doing your homework ahead of time,"
Adam Smith, who has pleaded guilty to insider trading charges,
testified in Manhattan federal court on Tuesday. "Getting the
number is more like cheating on a test ... I knew the answer
ahead of time."
Smith, 39, is the first former Galleon employee to take the
witness stand for the government at Rajaratnam's trial, the
biggest Wall Street insider trading case since the 1980s. He
contends that he supplied inside stock tips to Rajaratnam,
Sri Lankan-born Rajaratnam, 53, is accused of making $45
million in illicit profit between 2003 and 2009 on stock tips
from high-placed corporate insiders.
Rajaratnam's trial started in early March and is expected
to last two months. He is charged with conspiracy and
securities fraud and faces up to 20 years in prison if
convicted. He has vowed to clear his name, arguing his trades
were based on research or publicly available information.
Smith pleaded guilty in January and said he leaked details
about merger activity and earnings reports to Rajaratnam and
others at Galleon.
On the stand, Smith testified there was pressure at Galleon
for "getting an edge" -- extra pieces of information where a
company's results might differ from Wall Street expectations.
Under questioning by prosecutor Andrew Michaelson, he
testified that he obtained non-public information from an
engineer at chipmaker Intersil Corp ISIL.O in Taipei, Taiwan.
Smith said the engineer shared inside information on the
company's earnings with Smith starting in 2004.
"One time I asked if he could be more specific about his
company's performance and there came a time when he could give
me an actual numerical value," Smith said.
Smith later testified: "Each time I would receive the
information, I would pass it on to Raj."
An Intersil representative was not immediately available to
comment on the case.
The case is USA v Raj Rajaratnam et al, U.S. District Court
for the Southern District of New York, No. 09-01184.
(Additional reporting by Grant McCool; writing by Martha
Graybow, editing by Matthew Lewis)