Two counts tossed in Rajaratnam brother's insider trading trial

Tue Jul 1, 2014 7:01pm EDT
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By Nate Raymond

NEW YORK (Reuters) - A U.S. judge on Tuesday dismissed two securities fraud counts against Rengan Rajaratnam, the younger brother of Galleon Group founder Raj Rajaratnam, in a surprise development in the federal criminal insider trading case.

Rengan Rajaratnam, a former Galleon fund manager, still faces a conspiracy count, after U.S. District Judge Naomi Reice Buchwald at a hearing in Manhattan dismissed other counts related to improper trading in technology company Clearwire Corp.

Buchwald said the question was whether Rengan Rajaratnam traded on inside information about Clearwire knowing the tipper breached his duties to keep it secret and in exchange for a personal benefit.

"I find a reasonable jury could not so find," she said.

The decision, which is not appealable, spared Rajaratnam from the most serious charges he faced. Each carried a maximum term of 20 years in prison, compared with five years for the conspiracy count.

Buchwald adjourned without ruling on whether she would dismiss the conspiracy count, though she indicated she likely would not.

Daniel Gitner, Rajaratnam's lawyer, and a spokesman for Manhattan U.S. Attorney Preet Bharara declined comment.

Prosecutors had accused Rajaratnam of conspiring with his older brother to trade on inside information about Clearwire and Advanced Micro Devices Inc in 2008.   Continued...

Rengan Rajaratnam exits the U.S. District Court for the Southern District of New York in Lower Manhattan June 17, 2014. REUTERS/Brendan McDermid