US prosecutors on Thursday unveiled insider trading charges against the brother of disgraced hedge fund manager Raj Rajaratnam in the latest chapter of a giant Wall Street fraud investigation.
The US Attorney's office for New York said Rajarengan Rajaratnam was charged with conspiracy and securities fraud related to technology stocks in 2008.
Rajaratnam was a portfolio manager at the Galleon Group hedge fund founded by his high-flying brother, who was arrested after a sprawling probe that included wire-taps on telephones and snared dozens of people. The elder Rajaratnam is currently in the second year of an 11-year prison sentence.
The two Rajaratnams conspired "to trade on the basis of material, non-public information... concerning Clearwire Corp. ('Clearwire') and Advanced Micro Devices, Inc. ('AMD') in 2008, earning nearly $1.2 million in profits," the prosecutor's office said in a statement.
Rajarengan Rajaratnam has not yet been arrested, prosecutors said, although they would not confirm a New York Times report that he is in Brazil.
Raj Rajaratnam, once a star of the hedge fund industry, was convicted on all 14 counts of insider trading while at Galleon, which managed some $7 billion in funds.
FBI Assistant Director George Venizelos said "Rengan Rajaratnam's career arc paralleled his brother's. He followed in Raj's footsteps by obtaining an MBA from a top-flight business school. He went to work for Raj at Galleon. As alleged in the indictment, Rengan also engaged in the same illegal conduct as Raj.
"He reaped the benefit of insider information obtained by Raj, and he planned to reciprocate by cultivating his own source of inside information. Now Rengan's career arc has descended to the same place his brother's did less than four years ago: defendant."