* 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 (Reuters) - 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, Galleon’s founder.
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)