Raj Rajaratnam?s Galleon Group hedge fund, with $7 billion in assets, was among the biggest commission payers on Wall Street, trading millions of shares worth hundreds of millions of dollars each day.
Yet, during Rajaratnam?s insider trading trial on Thursday in Federal District Court in Manhattan, prosecutors ignored Galleon?s voluminous trading activity and instead focused on relatively small transactions that Rajaratnam made in his friend?s brokerage account at Charles Schwab.
Those trades ? some of them hugely profitable ? were made by Rajaratnam based on illegal tips about publicly traded companies, prosecutors said.
The owner of the Schwab account was Rajiv Goel, a former executive at Intel and a main cooperating government witness. Goel has pleaded guilty to providing Rajaratnam with confidential information about Intel?s earnings and investments.
On Thursday, Goel testified that in 2005 he had asked Rajaratnam, his business school classmate and by then a highly regarded trader, to help him make some money in the market. Rajaratnam, who had around that time lent and gifted Goel a total of $600,000, agreed to buy and sell stocks in Goel?s Schwab account.
Prosecutors meticulously took Goel through several trades in that account, including two involving PeopleSupport, a technology company. These discrete trades stood in sharp contrast to the usual heavy volume of rapid-fire trading at Galleon.
These discrete trades ? 1,000 shares here; 5,000 shares there ? stood in sharp contrast to the usual heavy volume of rapid-fire trading at Galleon. As a result, the trades could be powerful evidence before jurors.