US prosecutors have dropped two insider trading-related charges against former Galleon Group hedge fund portfolio manager Rengan Rajaratnam, the second time in two weeks the government has whittled down its case against him. In a new indictment made public on Friday, prosecutors eliminated two securities fraud charges against Rajaratnam, but he is expected to go to trial on other criminal charges.
Rajaratnam is the younger brother of Galleon founder Raj Rajaratnam, who is serving an 11-year prison sentence for his 2011 conviction for insider trading. Two weeks ago, prosecutors dropped two other securities fraud counts against Rengan Rajaratnam following a written opinion from US District Judge Naomi Reice Buchwald that those charges were "internally inconsistent" with a conspiracy charge in the indictment.
It was not immediately clear why prosecutors decided to abandon the additional counts. A spokesman for the office of Manhattan US Attorney Preet Bharara declined to comment. Rajaratnam's lawyer, Daniel Gitner, declined to comment. Rajaratnam is scheduled to face trial on June 17, the latest case in a broad insider trading investigation that has resulted in 80 convictions since October 2009.
The government has accused the 43-year-old of conspiring with his brother to trade on non-public information related to Clearwire Corp and Advanced Micro Devices Inc. Rengan Rajaratnam had initially been charged with securities fraud with respect to trades executed in various Galleon funds that prosecutors said netted more than $1 million in illegal profits. All four of those counts have been dropped. Rajaratnam now faces two fraud counts over trades in his own brokerage account, which prosecutors say earned him about $100,000 in illicit gains, and a conspiracy count related to the broader scheme. The case is US v. Rajaratnam, US District Court, Southern District of New York, No 13-cr-00211.
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