Reuters: Accused hedge fund manager Raj Rajaratnam did not get secrets about Advanced Micro Devices Inc and eBay Inc from a former high-placed friend because the information was already public, his lawyer argued at trial on Wednesday.
In heated exchanges that came close to shouting in the biggest Wall Street insider trading trial in decades, lawyer John Dowd also tried to point out contradictions in testimony of key prosecution witness Anil Kumar, a disgraced former partner of the elite McKinsey & Co consultancy.
Galleon Group founder Rajaratnam is on trial in Manhattan federal court accused of making $45 million in illicit profit from trades in AMD, eBay, Intel Corp and other stocks based on tips by a network of executives and traders at the highest levels of corporate America.
If convicted in a government case built on wiretapped phone conversations and testimony of former associates who pleaded guilty, he faces up to 20 years in prison on the most serious charge of securities fraud.
The gruff, 69-year-old Dowd showed the jury and Kumar emails and articles in the financial industry press about AMD’s planned sale of its fabrication business in 2008 and planned layoffs at eBay in October 2008.
“So the whole thing was public?” Dowd asked Kumar about the reports on AMD. Kumar said the prospective deal with an Abu Dhabi investor was confidential.
Similarly, the lawyer cited articles predicting with precision that eBay would lay off 10 percent of its 15,000 employees.
“As a consultant to eBay I would have more accurate information than journalists,” responded Kumar, who spent four days on the witness stand. Kumar insisted that he did provide Rajaratnam with non-public information and later on Wednesday told the court it was “to my eternal regret.”
Later, Dowd challenged Kumar, pointing out apparent contradictions between a statement he made at his January 2010 guilty plea proceeding and his trial testimony.
At times jabbing his glasses toward Kumar or waving documents in the air, Dowd went on to cite Kumar’s statement before a judge that he understood Rajaratnam would trade on securities based on information he provided him about McKinsey clients.
The lawyer pulled out the transcript of Kumar’s trial testimony on Tuesday in which he said under cross-examination that there was no such agreement.
“No, sir, not at all,” Kumar had said in response to a question from Dowd.
“You never agreed with Mr Rajaratnam to engage in insider trading, did you, sir?” to which Kumar responded: “I would not have done it had I known he would ask me for that information, sir.”
The government’s first key witness, Kumar worked for McKinsey for 23 years. He is among 19 people who have pleaded guilty to criminal charges in the broad Galleon case.
Also on Wednesday, the government called another witness, former Intel investor relations manager Alex Lenke. Former Intel executive Rajiv Goel pleaded guilty in the case and could testify against Rajaratnam.
The case is USA v Raj Rajaratnam et al, U.S. District Court for the Southern District of New York, No. 09-01184.