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Billionaire Raj Rajaratnam, founder of the Galleon hedge fund, has pleaded not guilty to charges that he was a major player in a scheme that used inside information to make stock trades that generated millions of dollars profits.
According to Fox News, Sri lankan-born Rajaratnam along with his co-conspirator Danielle Chiesi -- both of whom were indicted on December 15 on charges of using non-public information from company executives to earn around $21 million in illegal profits, entered their pleas before US District Judge Richard Holwell in Manhattan.
The alleged insider-trading ring operated "from at least in or about 2003 up to and including in or about March, 2009," the 17 count conspiracy and fraud indictment said.
Rajaratnam, now on bail, has said he is innocent.
The indictment said Rajaratnam, Chiesi and others repeatedly traded on material, non-public information pertaining to upcoming earnings forecasts, mergers, acquisitions, or other business combinations (inside information).
Rajaratnam, who also allegedly provided financial support to a charity linked to the Tamil Tigers terror group, closed down Galleon after he and five others were arrested in October in what prosecutors said was "the largest hedge fund insider trading case in history."
Insiders and others at hedge funds, public companies, and firms -- including Intel, IBM, McKinsey & Company, Akamai Technologies, Inc and Polycom, Inc, gave the Inside Information as tips.
As a result of their insider trading, Rajaratnam, Chiesi and others earned millions of dollars of illegal profits for themselves and the hedge funds with which they were affiliated.
Rajaratnam, the indictment alleged, engaged in overlapping schemes with Ali Far and Roomy Khan -- both of whom have pleaded guilty to insider trading charges and are cooperating with the government -- as well as Chiesi and other co-conspirators to trade on the basis of inside information in several publicly traded companies.
Specifically, these individuals engaged in insider trading in Polycom, Hilton Hotels Corp, Google Inc, Clearwire Corporation, Akamai, Advanced Micro Devices, and PeopleSupport, Inc, it said.
Among other things, telephone conversations between Rajaratnam and Chiesi, intercepted based on court-authorised wiretaps of phones, revealed that he, Chiesi and others routinely received Inside Information directly or indirectly from insiders and provided it to each other for the purpose of trading based on the information.
For instance, from January 2006 until July 2007, Rajaratnam and others engaged in schemes to trade on the basis of inside information pertaining to Polycom, Hilton, and Google.
He obtained inside information relating to these companies from Khan who, in turn, obtained this information from various inside sources. Based on trading related to information about these entities, Rajaratnam caused Galleon to earn a total profit of more than $12.7 million.