Rajaratnam's brother charged in Wall St insider case

US prosecutors unveiled insider trading charges Thursday 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 the Southern District of 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 wiretaps 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. and Advanced Micro Devices, Inc. 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. He also faces civil charges from the Securities and Exchange Commission (SEC), which said he earned more than $3 million in "illicit gains" through both his work at Galleon and a hedge fund advisory firm he founded called Sedna Capital Management. 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," Venizelos added. The SEC likewise painted a picture of a close partnership between the siblings, saying "Rengan Rajaratnam profited handsomely from his brother's insider trading activities, and he may have believed he wouldn't have to pay a price for his involvement. "But now he is learning the true cost of his participation in the most expansive insider trading scheme ever perpetrated," the US regulator added.