Galleon hedge fund founder Raj Rajaratnam can expect to go on trial on criminal charges of insider trading on October 25, a US judge said on Wednesday, a ruling that complicates a civil trial on similar charges. Manhattan federal court Judge Richard Holwell said that all parties to the case including the court saw "legitimate reasons" to try the criminal trial first for Rajaratnam, 52, and co-defendant Danielle Chiesi, 44.
But another judge had set August 2 to try civil charges brought by market regulators. Usually when there are parallel criminal and civil cases, the criminal case takes precedence. However, in the Galleon hedge fund insider trading probe that ensnared about 21 people last October and November, Judge Jed Rakoff, overseeing the civil case, quickly set the August trial date and denied requests to wait for resolution of the criminal matter.
"Let's see what in their independent opinion the SEC (Securities and Exchange Commission) and Judge Rakoff believe should happen in the SEC action," Holwell said during a court hearing for Rajaratnam and Chiesi, who were both present. Rajaratnam and Chiesi, formerly with New Castle Funds LLC in New York, have both pleaded not guilty to the criminal and civil charges.
The arrests and charges drew widespread attention because they included allegations against a well-known hedge fund figure in Sri Lankan-born Rajaratnam and employees of some of America's best-known companies, including International Business Machines Corp, McKinsey & Co management consultants and Intel Capital, investment arm of Intel Corp. The case is USA v Raj Rajaratnam et al, US District Court for the Southern District of New York, No 09-01184.