Thaindian News

New York, March 25 (IANS) A former Indian American Intel executive has testified that he tipped hedge fund tycoon Raj Rajaratnam about Intel board’s decision to invest $1 billion in a joint wireless venture by Sprint and Clearwire.

Prosecutors in the biggest US insider trading case Thursday played several recordings of Rajiv Goel, who had worked in Intel’s treasury group, about his alleged 2008 tip to Sri Lankan born Galleon group hedge fund co-founder Rajaratnam.

Goel also testified that Rajaratnam made $123,000 in profit for him in 2008 from trading in the stock of PeopleSupport Inc after a unit of Essar Group, an Indian company, offered to buy PeopleSupport that year.

Goel told jurors that Rajaratnam bought 15,000 shares of PeopleSupport in Goel’s Charles Schwab account on July 2, 2008, and another 15,000 shares on July 28.

When the companies announced the deal Aug 4, 2008, PeopleSupport stock jumped 25 percent. Goel sold his 30,000 shares one week later at a profit of $103,000, he testified.

Later, when Essar announced in October 2008 that it would need additional time to close the acquisition, PeopleSupport shares dropped sharply.

Goel said Rajaratnam again bought 30,000 shares for his account, telling him he was “100 percent sure” the deal would close.

Prosecutors also played a tape from March 25, 2008, of a conversation between Raj and his brother Rengan Rajaratnam six days after Goel was recorded telling Rajaratnam about the venture and Intel’s investment.

In the conversation shortly after the Wall Street Journal posted an online story about the Sprint-Clearwire deal, Rengan Rajaratnam is heard telling his brother: “It’s all over the Wall Street Journal.”

“They’re short on details, but they kind of say, you know, they’re looking to raise as much as $3 billion.”

The brief telephone call is intended to show that Goel’s tips to Raj Rajaratnam, beginning on March 19, did in fact contain confidential information and included news that hadn’t appeared in the press.

Prosecutors have said that Rengan Rajaratnam, founder of hedge fund Sedna Capital Management, conspired with his brother to trade on inside information. Rengan hasn’t been criminally charged.

Goel, who pleaded guilty Feb 8, 2010, to conspiracy and securities fraud charges, recounted a call from Rajaratnam in 2009 after Intel acquired Wind River Systems Inc.

Rajaratnam complained that Goel hadn’t told him about the deal. “He said, ‘How come you didn’t tell me?’” Goel testified. Rajaratnam also said, “Fortunes are made and lost on this” type of information.

Also that year, Rajaratnam yelled at Goel when Goel couldn’t uncover Intel financial data, he testified. “What kind of executive are you?” Rajaratnam shouted, according to Goel.

(Arun Kumar can be contacted at arun.kumar@ians.in)