Rengan rajaratnam trial

Following arguments at a hearing in New York, U. District Judge Naomi Reice Buchwald declined to dismiss a count of conspiracy against Rengan Rajaratnam, allowing the case to proceed to the jury.

Rengan Rajaratnam, the younger brother of convicted Galleon Group founder Raj Rajaratnam, was cleared on Tuesday of conspiring to engage in insider trading.

The ruling came after she dismissed two securities fraud counts against Rajaratnam, 43, related to the government's claims he engaged in insider trading in technology company Clearwire Corp in The non-appealable decision meant Rajaratnam, a former Galleon portfolio manager, would avoid the most serious charges he faced, each of which carried a maximum term of 20 years in prison.

The remaining conspiracy count carries up to five years in prison. The ruling was a serious blow to prosecutors under Manhattan U. Attorney Preet Bharara, whose office has won 81 insider trading convictions of individuals through pleas or jury verdicts since October , never losing at trial. The ruling's impact could be seen throughout Wednesday's arguments, which drew the attendance of Bharara's top deputy, Richard Zabel.

His trial in New York City began in June, but he was found not guilty by the jury in July Rengan Rajaratnam.

A comment by assistant U. Rajaratnam's lawyer, Daniel Gitner, had sought to bar the government from arguing anything about Clearwire going forward. Buchwald declined his request, saying it was not in his interest, given how she found no jury could reasonably find Rajaratnam engaged in insider trading in Clearwire. Many of the arguments over the remaining count turned on whether prosecutors could establish Rajaratnam engaged in a conspiracy regarding the stock of another company, Advanced Micro Devices Inc.

In a wiretapped recording of a call that same day, Rengan Rajaratnam told his brother he had talked with another McKinsey partner, David Palecek, who "spilled his beans," encouraged him to buy AMD and was "a little dirty. Gitner said his client was simply seeking investment advice from Palecek and discussed other stocks despite prohibitions imposed on McKinsey partners.

But Christopher Frey, another prosecutor, said Rajaratnam's "own words belie the notion" that he was not seeking inside information, pointing to part of the call when Rajaratnam said Palecek "kind of volunteered the information on the investments.