| NEW YORK, July 2
NEW YORK, July 2 Prosecutors avoided the
dismissal of the last remaining count against Rengan Rajaratnam
on Wednesday, a day after a federal judge tossed the primary
fraud charges against Galleon Group founder Raj Rajaratnam's
Following arguments at a hearing in New York, U.S. District
Judge Naomi Reice Buchwald declined to dismiss a count of
conspiracy against Rengan Rajaratnam, allowing the case to
proceed to the jury.
"I very much enjoyed hearing a preview of your summations,
but I think I am going to have to hear them again," Buchwald
The ruling came after she dismissed two securities fraud
counts against Rajaratnam, 43, related to the government's
claims he engaged in insider trading in technology company
Clearwire Corp in 2008.
The non-appealable decision meant Rajaratnam, a former
Galleon portfolio manager, would avoid the most serious charges
he faced, each of which carried a maximum term of 20 years in
prison. The remaining conspiracy count carries up to five years
The ruling was a serious blow to prosecutors under Manhattan
U.S. Attorney Preet Bharara, whose office has won 81 insider
trading convictions of individuals through pleas or jury
verdicts since October 2009, never losing at trial.
The ruling's impact could be seen throughout Wednesday's
arguments, which drew the attendance of Bharara's top deputy,
A comment by assistant U.S. attorney Randall Jackson that
the prosecution might still focus on how a tip about Clearwire
to Raj Rajaratnam went to Rengan drew criticism from Buchwald.
"I made a ruling on that yesterday," she said. "What you're
saying is inconsistent with that."
Rajaratnam's lawyer, Daniel Gitner, had sought to bar the
government from arguing anything about Clearwire going forward.
Buchwald declined his request, saying it was not in his
interest, given how she found no jury could reasonably find
Rajaratnam engaged in insider trading in Clearwire.
Many of the arguments over the remaining count turned on
whether prosecutors could establish Rajaratnam engaged in a
conspiracy regarding the stock of another company, Advanced
Micro Devices Inc.
Prosecutors contend that in August 2008, Raj Rajaratnam told
his brother of a "handshake" deal between AMD and an Abu Dhabi
state-owned company he learned about from Anil Kumar, a McKinsey
& Company partner.
In a wiretapped recording of a call that same day, Rengan
Rajaratnam told his brother he had talked with another McKinsey
partner, David Palecek, who "spilled his beans," encouraged him
to buy AMD and was "a little dirty."
Gitner said his client was simply seeking investment advice
from Palecek and discussed other stocks despite prohibitions
imposed on McKinsey partners.
But Christopher Frey, another prosecutor, said Rajaratnam's
"own words belie the notion" that he was not seeking inside
information, pointing to part of the call when Rajaratnam said
Palecek "kind of volunteered the information on the
Raj Rajaratnam is serving an 11-year prison term following
his 2011 conviction. Kumar pleaded guilty and was sentenced to
two years probation in 2012. Palecek died in 2010.
The case is U.S. v. Rajaratnam, U.S. District Court,
Southern District of New York, No. 13-00211.
(Reporting by Nate Raymond in New York; Editing by Ted Botha
and Leslie Adler)