| NEW YORK
NEW YORK May 2 U.S. prosecutors plan to drop
two securities fraud charges against former Galleon Group hedge
fund portfolio manager Rengan Rajaratnam, the younger brother of
Raj Rajaratnam, who founded the firm and was convicted of
insider trading in 2011.
In a letter to U.S. District Judge Naomi Reice Buchwald late
Thursday, prosecutors in the office of Manhattan U.S. Attorney
Preet Bharara said they no longer plan to pursue two of the
seven counts brought against Rajaratnam in 2013.
Rengan Rajaratnam is scheduled to face trial on June 17, the
latest case in a sweeping insider trading investigation that has
led to 80 convictions since October 2009.
The prosecutors' decision comes two weeks after Buchwald
said in a written opinion that the two counts in question were
"internally inconsistent" with a conspiracy charge in the
At the time, Buchwald withheld ruling on whether to dismiss
them to give the government a chance to determine whether it
would proceed on those charges. She also denied Rajaratnam's bid
to dismiss the other charges against him.
A lawyer for Rajaratnam did not immediately respond to a
request for comment on Friday. A spokesman for Bharara declined
Raj Rajaratnam, Galleon Group's founder, is serving an
11-year prison sentence after a jury convicted him in 2011 for
insider trading-related crimes.
Prosecutors claim the 43-year-old Rengan Rajaratnam, a
former portfolio manager at Galleon, conspired with his brother
to trade on non-public information relating to Clearwire Corp
and Advanced Micro Devices Inc, earning $1.2 million in
In her opinion, Buchwald expressed skepticism about two
counts relating to Clearwire purchases. The indictment first
alleges that Raj Rajaratnam caused Galleon funds to buy
Clearwire stock and later alleges that Rengan Rajaratnam caused
The government had argued that Rengan Rajaratnam "aided and
abetted" his brother in the purchase of Clearwire stock, but
Buchwald said prosecutors had offered no evidence to support
If convicted of the highest count against him, Rajaratnam
would face a maximum sentence of 20 years.
The U.S. Securities and Exchange Commission has also filed a
parallel civil case against him.
The cases are U.S. v. Rajaratnam, U.S. District Court,
Southern District of New York, No. 13-cr-00211; and SEC v.
Rajaratnam in the same court, No. 13-01894.
(Editing by Noeleen Walder and Bernadette Baum)