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Tuesday, November 24, 2009

Rajaratnam Denies Insider Trading Charges

By Darryl R. Isherwood

FOXBusiness

Billionaire hedge fund manager and accused insider trader Raj Rajaratnam Tuesday denied receiving or trading on non-public information about Google Inc. (GOOG), Hilton Hotels, and other companies as was alleged in civil and criminal charges brought against the Galleon Group hedge fund founder.

In an answer to civil charges brought by the Securities and Exchange Commission, lawyers for Rajaratnam said any information the trader received was already public and all trades were consistent with the hedge fund’s established positions and strategies.

The filing also said Rajaratnam received detailed information from a host of analysts employed by the hedge fund that was more detailed than any tips from outside the firm.

The SEC is seeking repayment of the money as well as penalties. The complaint also seeks to prohibit Rajaratnam and two others from acting as an officer or director of a public company.

In October, Rajaratnam and five others were accused by both the SEC and the U.S. Attorney in Manhattan in an insider trading scheme that allegedly netted the group some $20 million. The U.S. Attorney has since charged 14 others in connection with the scheme and the alleged take has risen to more than $40 million.

Investigators used a series of wire taps and informants to ensnare the group, which included a prominent official at International Business Machines (IBM) along with traders from several hedge funds.

Rajaratnam’s attorneys argue in their response to the SEC that the wire taps were unconstitutional, saying electronic surveillance is only acceptable when “alternative investigative procedures have been tried or appear unlikely to succeed."

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