Thaindian News

New York, April 6 (IANS) A US Federal Bureau of Investigation (FBI) agent has testified how hedge fund tycoon Raj Rajaratnam made millions thanks to secret tips from company insiders including two Indian Americans.

Galleon Group founder Rajaratnam made nearly $23 million in profits from his trading in ATI Technologies after allegedly receiving tips about its potential acquisition by Advanced Micro Devices (AMD) in 2006, FBI Special Agent James C. Barnacle Jr. told a Manhattan court Tuesday.

Several times in the months leading up to the merger’s announcement when Anil Kumar, a former Indian American McKinsey official, came in contact with confidential information about the deal and allegedly passed it along to Rajaratnam, he alleged.

Kumar, who pleaded guilty to conspiracy and securities fraud in January 2010, previously testified in the biggest insider trading trial in the US that he was a source on the deal.

Barnacle also testified about his review of phone records between Rajiv Goel, a former Indian-American manager in Intel’s treasury department, and Rajaratnam ahead of Intel’s earnings announcement in April 2007.

Goel, who pleaded guilty last year to conspiracy and securities fraud, has earlier testified that he gave Rajaratnam details about Intel’s earnings before they were publicly announced.

The agent testified that Rajaratnam sent an instant message to his trader at Galleon April 9, 2007, about an hour after receiving a phone call from Goel. The message said “short 1 million INTC”, referring to Intel’s stock symbol, the agent said.

Later, as the announcement grew closer and Rajaratnam and Goel engaged in several more phone conversations, Rajaratnam began covering his short position and buying Intel shares, Barnacle said.

By the time of the April 17, 2007 announcement, Rajaratnam held nearly two million shares of Intel, the agent said. As a result of his trading, Rajaratnam was able to earn profits and avoid losses of about $2.48 million, Barnacle said.

Separately, US District Judge Richard Holwell ruled Tuesday prosecutors can’t show jurors videotapes of ex-Intel executive Roomy Khan allegedly faxing confidential information to Rajaratnam in 1998. Holwell said he might admit the video if Khan were to testify.

Khan, who has pleaded guilty to insider trading, allegedly helped Rajaratnam make $4 million in a day by passing on a tip from Indian origin Moody’s analyst Deep Shah about Hilton hotel chain takeover by private-equity firm Blackstone Group.

Shah, who was declared a fugitive two years ago, was recently located in Mumbai.