Legal News

A Tale of Two Brothers, Raj and Rengan

By Ashby Jones

A WSJ story on Tuesday pivots the spotlight away from Galleon Group founder Raj Rajaratnam, currently on trial for insider-trading, and onto his brother, Rengan Rajaratnam.

Prosecutors have alleged that Rengan’s loyalty to Raj ran a little too deep. Specifically, according to filings made by prosecutors, Rengan participated in an alleged coverup by removing notebooks with handwritten notes about stocks from Raj’s office shortly after Raj was arrested. Click here for the WSJ story.

As reporters Susan Pulliam and Chad Bray explain, the criminal case against Raj Rajaratnam grew out of a separate civil investigation by the SEC  in 2007 of Rengan Rajaratnam’s hedge fund, according to people familiar with the matter. Galleon was asked to produce documents in that civil inquiry; some of those documents led the government to focus on Raj Rajaratnam, the ­people say.

The filing centers on testimony expected to be given Tuesday by former Galleon fund manager Adam Smith. In a filing, the government said Smith saw Rengan enter Raj Rajaratnam’s office in October 2009 and leave with notebooks, which Smith said Raj Rajaratnam often carried with his handwritten notes about stocks.

In a conference after today’s testimony, Judge Richard Holwell said he was “leaning” toward the argument by Rajaratnam’s lawyers that testimony from Smith about the removal of the notebooks shouldn’t be allowed because it is “prejudicial.” Judge Holwell said he would give his ruling on the issue Tuesday.

Raj Rajaratnam and his brother haven’t been charged with obstruction of justice or any other criminal wrongdoing in connection with the alleged removal of the notebooks. The government has called Rengan a co-conspirator, but hasn’t indicted him.

A lawyer for Smith couldn’t immediately be reached for comment about the matter.

Full post as published by Law Blog - WSJ.com on March 29, 2011 (boomark / email).