| NEW YORK, June 18
NEW YORK, June 18 Just because the one-time
billionaire hedge fund manager Raj Rajaratnam engaged in insider
trading doesn't mean his younger brother did as well, a lawyer
for Rengan Rajaratnam told jurors on Wednesday.
In opening statements during Rengan Rajaratnam's trial in
New York federal court, lawyer Daniel Gitner portrayed his
client as the youngest of five children who lived in the shadow
of his oldest brother, Galleon Group LLC's founder.
U.S. prosecutors say Rengan Rajaratnam conspired with his
brother to trade on inside information about technology
companies, Clearwire Corp and Advanced Micro Devices Inc
, in 2008.
While evidence would show Raj Rajaratnam was seeking out
secret information to trade on, said Gitner, Rengan Rajaratnam
was focused on legitimate research and was never told any
"Rengan did not do what Raj did, Rengan did not know what
Raj knew, and Rengan is flat out not guilty," he said.
But Christopher Frey, an assistant U.S. attorney, told
jurors Rengan Rajaratnam used confidential information his older
brother had obtained from a corrupt network of professionals.
"He did so to get an illegal edge over ordinary investors in
the stock market who played by the rules," Frey said.
The statements came at the start of the insider trading
trial of Rengan Rajaratnam, 43, who faces three counts of
conspiracy and securities fraud.
Much of the evidence will comprise wiretap conversations by
Raj Raratnam, alleged tippers and his brother, the government
Wiretap recordings prominently featured in the 2011 trial of
Raj Rajaratnam, 57, who is serving an 11-year prison term. The
U.S. Supreme Court on Monday declined to overturn the
Prosecutors plan to call two key alleged tippers, Rajiv
Goel, a former Intel Corp executive, and Anil Kumar, a
onetime McKinsey & Company partner, Frey told jurors Wednesday.
Frey said Goel told Raj Rajaratnam in March 2008 that Intel
was planning to invest $1 billion in Clearwire, a tip that
helped Galleon make hundreds of thousands of dollars and Rengan
to personally earn $100,000.
Later, in August 2008, Kumar told Raj Rajaratnam about a
planned multi-billion dollar deal involving AMD, Frey said.
Rengan Rajaratnam, who was told about the deal by Raj, earned
$40,000 trading in AMD, Frey said.
Goel and Kumar previously pleaded guilty, testified at Raj
Rajaratnam's trial and were sentenced in 2012 to two years
probation. They have been subpoenaed to testify at Rengan
Rajaratnam's trial, Frey said.
Still, Gitner said Rengan traded differently than his
brother, relying on research. His relationship with Raj
Rajaratnam was "complicated," and Rengan was twice effectively
demoted in 2008 after trading losses made him "furious," he
Gitner said there was no evidence Raj Rajaratnam told Rengan
about his sources, let alone any benefits they received from
providing inside information.
"These brothers weren't joined at the hip," he said.
The case is U.S. v. Rajaratnam, U.S. District Court,
Southern District of New York, No. 13-00211.
(Editing by Noeleen Walder and Bernadette Baum)