Prosecutors plan to play recorded calls in Rajaratnam trial

NEW YORK: US prosecutors plan to play recorded phone calls between billionaire Raj Rajaratnam and several Galleon Group employees in the case related to the hedge fund manager orchestrating an insider trading scam.

Galleon Group founder Sri Lankan-born Rajaratnam is facing multiple charges of conspiracy and security fraud and is accused of making illegal profits worth millions of dollars.

British daily Financial Times has reported that US prosecutors plan to play recorded phone calls between Rajaratnam and several Galleon employees to bolster allegations that he traded on inside information.

According to prosecutor Jonathan Streeter, in one recorded call, Rajaratnam allegedly tells a Galleon employee that “he was told by a board member of Goldman Sachs” that the bank would probably report its first loss as a public company.

“The call was made after Rajaratnam received a tip from Rajat Gupta, former head of McKinsey and a Goldman Sachs board member,” Streeter was quoted as saying.

A well known Indian-American, Gupta has been accused of insider trading by the US market regulator Securities and Exchange Commission (SEC), which has initiated administrative and civil proceedings against him.

Gupta has denied charges of any wrongdoing. Prosecutors have not charged Gupta with any wrongdoing, but described him as a co-conspirator, the report said.

Meanwhile, Rajaratnam, whose criminal insider trading trial starts on Tuesday, has denied any wrongdoing.

In relation to the insider trading scam , the US authorities had arrested some people last year, including Intel executive Rajiv Goel and former director at McKinsey & Co Anil Kumar.

Both India-origin executives have pleaded guilty. Financial Times said Kumar would be the government’s “first star witness”.

“Kumar is also recorded telling Rajaratnam of a conversation he had at a dinner with Mukesh Ambani, chairman of Reliance Industries ,” the daily noted.

Quoting prosecutors, the report said this would show that Kumar asked Ambani for information, which the government plans to use as context to prove that Kumar sought information from his clients.

“The government is not alleging that Mr Ambani revealed any company secrets,” the report added. (PTI)