The criminal trial of 1983 Wharton graduate alumnus Raj Rajaratnam — accused of receiving and profiting from insider trading tips — will occur on Oct. 25, after his civil trial.
The development is contrary to the wishes of federal prosecutors, who contended in court documents that having the civil trial first would create an “unfair strategic advantage” in the criminal trial.
Last October, the FBI arrested Rajaratnam, founder of hedge fund management firm Galleon Group, for allegedly receiving and profiting from insider trading tips. Rajaratnam awaits a criminal trial against him as well as a civil trial against Galleon Group, scheduled for Aug. 2.
According to court documents filed by Assistant U.S. Attorney Jonathan Streeter, the prosecutor in the criminal case, important rulings about evidence such as wiretap recordings in the civil trial can affect the admission of evidence that would be used in the criminal case.
In addition, two new securities fraud charges were filed on Feb. 9 against Rajaratnam. He and his codefendant Danielle Chiesi, an executive of New Castle Partners, are now charged with a total of 19 counts of securities fraud and conspiracy with Rajaratnam facing a maximum prison sentence of 185 years.
Rajaratnam pleaded not guilty to all charges against him.
The Securities and Exchange Commission has charged 22 individuals in connection with the Galleon civil case, including former Intel Capital Director of Strategic Investments Rajiv Goel and former McKinsey & Co. director Anil Kumar, also 1983 Wharton graduate alumni.
Earlier this year, Goel and Kumar pleaded guilty to engaging in insider trading schemes with Rajaratnam, according to court documents.
According to a Feb. 9 press release, Preet Bharara, the U.S. Attorney for the Southern District of New York, called the Galleon case the “largest hedge fund insider trading case in history” and that Galleon illegally profited and avoided the loss of $45 million by trading in companies such as IBM, Google and eBay using inside information.
Neither Streeter nor John Dowd, defense lawyer for Rajaratnam, were available for comment.
Rajaratnam is ranked by Forbes magazine as one of the richest people in the world, with a wealth of about $1.3 billion.
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