Trial of Rajaratnam's brother ends as defence says US case flawed
Jul 08 2014 , New York
In closing arguments in New York federal court, Daniel Gitner, Rengan Rajaratnam's lawyer, told jurors what remained of the case against his client, a former Galleon fund manager, "doesn't fit together."
In no wiretapped phone call did Raj Rajaratnam tell his brother he was trading on inside information, Gitner said. Nor was there proof Rengan Rajaratnam entered into a conspiracy to engage in insider trading, he said.
"They can't finish the puzzle they are so desperate to finish," Gitner said.
But Randall Jackson, the prosecutor who made the government's closing argument, said the brothers engaged in "obvious criminal activity" that allowed Rengan Rajaratnam to personally earn $40,000 trading on inside information about technology company Advanced Micro Devices Inc in 2008.
"He is a coconspirator," Jackson said. "His brother embraced him."
The case is part of a broad crackdown on insider trading by Manhattan US Attorney Preet Bharara's office that has resulted in 81 convictions since October 2009. Bharara and some top officials from the office were in the courtroom on Monday.
Jury deliberations are expected to begin on Tuesday.
Last week, the prosecution suffered a big setback when US District Judge Naomi Reice Buchwald dismissed two securities fraud counts against Rengan Rajaratnam related to improper trading in Clearwire Corp. [ID:nL2N0PC27J]
He now faces a single conspiracy account, which carries a maximum term of five years in prison.
Jackson said jurors should not allow Gitner to distract them from the "simple truth" that Rajaratnam and his brother agreed to engage in insider trading.
He cited an August 2008 phone call, in which Raj Rajaratnam told his brother about a "handshake" deal between AMD and an Abu Dhabi state-owned company.
The information, he said, came from Anil Kumar, a former McKinsey & Company partner. The same day, Rengan Rajaratnam told his brother he had met with another McKinsey partner, David Palecek, who was "a little dirty" and "kind of volunteered the information on the investments."
Jackson said the comment that Palecek was "dirty" showed "Rengan's understanding he can exploit this guy."
But Gitner said the "dirty" remark referred to investment advice Rengan Rajaratnam received from Palecek, whom he met in business school. McKinsey policy prohibits such advice. Palecek died in 2010.
"It makes no sense for Rengan to seriously ask someone he hadn't seen in years to break the law," Gitner said.
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.
The case is US v. Rajaratnam, US District Court, Southern District of New York, No. 13-00211.