Rengan Rajaratnam cleared, U.S. insider trading streak snapped

Tue Jul 8, 2014 6:11pm EDT
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By Nate Raymond and Joseph Ax

NEW YORK (Reuters) - Rengan Rajaratnam, the younger brother of convicted Galleon Group founder Raj Rajaratnam, was cleared on Tuesday of conspiring to engage in insider trading while at the hedge fund, ending a five-year winning streak by U.S. prosecutors.

After deliberating for less than four hours, a federal jury in New York found Rengan Rajaratnam, a former portfolio manager at Galleon, not guilty of the one conspiracy count he faced following the mid-trial dismissal by a judge of two more serious fraud charges.

Rajaratnam, 43, who was living in Brazil at the time of his indictment, hugged his lawyers after the jurors were dismissed.

"You can go back to Brazil for the finals," U.S. District Judge Naomi Reice Buchwald said, referring to the World Cup.

"Absolutely," Rajaratnam said.

Three years after jurors in the same courthouse convicted Raj Rajaratnam, 57, for an insider trading scheme that resulted in $63.8 million in illicit profit. He is serving an 11-year prison sentence.

Before Tuesday, a crackdown on insider trading led by Manhattan U.S. Attorney Preet Bharara's office had resulted in the conviction of 81 people with no acquittals since October 2009.

"While we are disappointed with the verdict on the sole count that the jury was permitted to consider, we respect the jury trial system whatever the outcome," Bharara said in a statement.   Continued...

Rengan Rajaratnam (L) embraces his lawyer Daniel Gitner as they exit the U.S. District Court for the Southern District of New York in Lower Manhattan July 8, 2014. REUTERS/Brendan McDermid