U.S. stings Rajaratnam with phone tap to end case

Reuters News
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Posted: Apr 18, 2011 3:47 PM
U.S. stings Rajaratnam with phone tap to end case

By Grant McCool

NEW YORK (Reuters) - Prosecutors stung accused Galleon hedge fund founder Raj Rajaratnam with one more phone tap recording as his lawyers rested the defense case on Monday at his trial on insider trading charges.

Rajaratnam, the central figure in the biggest Wall Street insider trading trial in decades, sat expressionless in Manhattan federal court as the jury heard a September 30, 2008 FBI phone tap with co-conspirator and fellow trader Danielle Chiesi.

"Look, the other thing is right, it's been widely speculated. What people don't know is the time," Rajaratnam was heard telling Chiesi as they discussed chipmaker Advanced Micro Devices Inc's then imminent sale of a manufacturing business.

The recording was played during a brief prosecution rebuttal to the defense case, which rested on Monday. The jury will hear closing arguments from both sides starting on Wednesday.

Through dozens of phone taps and friends-turned-government witnesses, the government sought to prove that Rajaratnam timed his trades according to inside tips he received. The defense argued that much of the information was already public through research, analysis and media reports.

Secretly-recorded phone conversations have been a hallmark of the government's case against Rajaratnam, who is accused of making $63.8 million illicitly between 2003 and March 2009. Nineteen out of 26 people charged in the broad Galleon case have pleaded guilty to conspiracy or securities fraud, including Chiesi. Three others testified against Rajaratnam.

(Additional reporting by Jonathan Stempel. Editing by Robert MacMillan)