NEW YORK: U.S. prosecutors said a Morgan Stanley banker leaked information regarding an upcoming takeover that ultimately was passed on to Galleon Group LLC founder Raj Rajaratnam, who faces insider trading charges.
Prosecutors also unveiled on Friday, Jan 21 a new indictment against Rajaratnam, which added a new securities fraud count and named seven additional stocks that were part of an alleged conspiracy involving Rajaratnam to commit securities fraud.
Among the newly named stocks is Goldman Sachs Group Inc, about which the government said Rajaratnam leaked information in October 2008 to a co-conspirator.
Jim McCarthy, a spokesman for Rajaratnam, declined to comment.
Prosecutors accuse the Sri Lankan-born Rajaratnam of being involved in a series of illegal trades that let him reap $45 million in proceeds. He is the central figure in a widening government probe into insider trading, including hedge funds such as Galleon. Rajaratnam has denied wrongdoing.
MORGAN STANLEY BANKER PUT ON LEAVE
According to a Jan. 20 letter from prosecutors to Rajaratnam's lawyers, the Morgan Stanley banker around May 2006 leaked details to someone of Advanced Micro Devices Inc's interest in buying ATI Technologies Inc, and that news of a pending takeover was later funneled to Rajaratnam.
The letter blacks out the identities of the banker and the person who allegedly tipped Rajaratnam.
AMD, the world's second-largest computer chipmaker, on July 24, 2006 announced it would buy ATI, a Canadian graphics chipmaker, for about $5.4 billion. That valued ATI at a roughly 24 percent premium over its closing price the previous Friday.
Morgan Stanley spokesman Pen Pendleton said the banker has been put on leave, and that the company is cooperating with the government's investigation.
Prosecutors in Manhattan previously alleged that Anil Kumar, a former McKinsey & Co. consultant, also leaked details of AMD's interest in ATI to Rajaratnam.
Kumar pleaded guilty last January to fraud and conspiracy charges and agreed to cooperate with prosecutors. He said at the time that Rajaratnam paid him $1.75 million for tips.
TRIAL APPROACHES
Rajaratnam's lawyers attached the letter referring to the Morgan Stanley banker as an exhibit to a request to stop a government subpoena of documents and other information from Galleon.
Prosecutors had asked U.S. District Judge Richard Holwell on Jan. 13 for permission to serve the subpoena.
Holwell also oversees the government's fraud and conspiracy case against Rajaratnam, expected to go to trial on Feb. 28.
A U.S. Securities and Exchange Commission civil case against Rajaratnam is slated for trial in April.
The new securities fraud count in the indictment concerns Rajaratnam's alleged purchase of shares of PeopleSupport Inc on the basis of inside information in July 2008, one week before the outsourcing company agreed to be acquired.
In a move that could add pressure to delay the criminal trial, Rajaratnam's lawyers said they "will move forthwith" to exclude evidence relating to stocks they believe prosecutors only recently decided to add to the case.
They cited "the extreme lateness of these disclosures and the severe prejudice caused to the defense's trial preparations" to justify the exclusion.
The amended indictment reflects Wednesday's guilty plea by former co-defendant Danielle Chiesi, who once worked for New Castle Funds LLC. She admitted to conspiracy charges.
The case is U.S. v. Rajaratnam, U.S. District Court, Southern District of New York, No. 09-01184. - Reuters
Prosecutors also unveiled on Friday, Jan 21 a new indictment against Rajaratnam, which added a new securities fraud count and named seven additional stocks that were part of an alleged conspiracy involving Rajaratnam to commit securities fraud.
Among the newly named stocks is Goldman Sachs Group Inc, about which the government said Rajaratnam leaked information in October 2008 to a co-conspirator.
Jim McCarthy, a spokesman for Rajaratnam, declined to comment.
Prosecutors accuse the Sri Lankan-born Rajaratnam of being involved in a series of illegal trades that let him reap $45 million in proceeds. He is the central figure in a widening government probe into insider trading, including hedge funds such as Galleon. Rajaratnam has denied wrongdoing.
MORGAN STANLEY BANKER PUT ON LEAVE
According to a Jan. 20 letter from prosecutors to Rajaratnam's lawyers, the Morgan Stanley banker around May 2006 leaked details to someone of Advanced Micro Devices Inc's interest in buying ATI Technologies Inc, and that news of a pending takeover was later funneled to Rajaratnam.
The letter blacks out the identities of the banker and the person who allegedly tipped Rajaratnam.
AMD, the world's second-largest computer chipmaker, on July 24, 2006 announced it would buy ATI, a Canadian graphics chipmaker, for about $5.4 billion. That valued ATI at a roughly 24 percent premium over its closing price the previous Friday.
Morgan Stanley spokesman Pen Pendleton said the banker has been put on leave, and that the company is cooperating with the government's investigation.
Prosecutors in Manhattan previously alleged that Anil Kumar, a former McKinsey & Co. consultant, also leaked details of AMD's interest in ATI to Rajaratnam.
Kumar pleaded guilty last January to fraud and conspiracy charges and agreed to cooperate with prosecutors. He said at the time that Rajaratnam paid him $1.75 million for tips.
TRIAL APPROACHES
Rajaratnam's lawyers attached the letter referring to the Morgan Stanley banker as an exhibit to a request to stop a government subpoena of documents and other information from Galleon.
Prosecutors had asked U.S. District Judge Richard Holwell on Jan. 13 for permission to serve the subpoena.
Holwell also oversees the government's fraud and conspiracy case against Rajaratnam, expected to go to trial on Feb. 28.
A U.S. Securities and Exchange Commission civil case against Rajaratnam is slated for trial in April.
The new securities fraud count in the indictment concerns Rajaratnam's alleged purchase of shares of PeopleSupport Inc on the basis of inside information in July 2008, one week before the outsourcing company agreed to be acquired.
In a move that could add pressure to delay the criminal trial, Rajaratnam's lawyers said they "will move forthwith" to exclude evidence relating to stocks they believe prosecutors only recently decided to add to the case.
They cited "the extreme lateness of these disclosures and the severe prejudice caused to the defense's trial preparations" to justify the exclusion.
The amended indictment reflects Wednesday's guilty plea by former co-defendant Danielle Chiesi, who once worked for New Castle Funds LLC. She admitted to conspiracy charges.
The case is U.S. v. Rajaratnam, U.S. District Court, Southern District of New York, No. 09-01184. - Reuters
No comments:
Post a Comment