Shortly after Raj Rajaratnam was arrested on Oct. 16, 2009, his brother Rengan went into the Galleon Group LLC’s co-founder’s office and removed his sibling’s private notebooks, former Galleon trader Adam Smith told prosecutors, according to a court filing made yesterday. Raj Rajaratnam’s lawyers yesterday filed a legal request asking a judge to bar Smith from testifying about Rengan Rajaratnam’s actions on Oct. 16. Prosecutors wanted to offer the account from Smith, who may testify for the government this week, “to prove the existence of the charged conspiracy and Rengan’s membership in it,” they wrote in court papers. [Bloomberg, earlier]

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Typically in families where their are children of the same sex, one of two dynamics exists. In scenario one, big brother (or sister) is the star, excelling at everything he or she does, making it impossible for the younger sibling to live up to the highly set bar. In scenario two, the younger sibling outpaces the older, making the first born feel like a fuck up for not having the same successes as junior. In the Rajaratnam family, the former was the case. Whereas Raj was married with a bunch of kids, little bro Rengan struggled to meet women, noting that it felt like “they’ve all gone away or someone snatched them up.” Whereas Raj ran a multi-billion dollar hedge fund, Rengan had a dinky little shop with assets under management barely hitting 200 million, seeded by his bro. And whereas Raj (allegedly) had some of the best insider trading skills on the Street, Rengan embarrassed himself trying to beat the press on hot tips.

The younger brother of Galleon Group founder Raj Rajaratnam called him in a panic in March 2008 after The Wall Street Journal published an article about a secret wireless venture the hedge-fund manager allegedly knew about from a confidential source at a company involved in the deal. In the call, which was caught on a federal wiretap and played Thursday at Raj Rajaratnam’s insider-trading trial in Manhattan, Rengan Rajaratnam appears to be frustrated that his ability to make trades ahead of the deal would be hampered now that it was public.

“Oh dude, we’re f—” Rengan Rajaratnam said, according to the tape played for jurors. “It just hit The Wall Street Journal.”

“What’s that?” Raj Rajaratnam asked.

“The Clearwire stuff,” his brother said.

Not saying living for so many years in Raj’s shadow finally caused Rengan to snap and rat him out, but not not saying it, either.

Galleon Jurors Hear Panicked Call From Rajaratnam Brother [WSJ]

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$$$ A key witness against Raj Rajaratnam testified he gave the Galleon Group founder secret information about Intel Corp. because “we were very good friends.” “Mr. Rajaratnam is—was—a very good friend of mine,” former Intel executive Rajiv Goel told jurors at Mr. Rajaratnam’s insider-trading trial Tuesday. “He was a good man to me. I was a good pal, a good person to him.” [WSJ]

$$$ Glencore Said Near to Hiring Eight Banks for $10 Billion IPO [Bloomberg]

$$$ Boon for Boutique Banks Continues With AT&T Deal [CNBC]

$$$ Rajaratnam Camp Offended By Inside Information Leaks To Media [Forbes]

$$$ Li Ka-Shing’s REIT to Start First Hong Kong Yuan IPO Today [Bloomberg]

$$$ Japan Sees Quake Damage Costing Up to $300 Billion [Reuters]

$$$ Is it a dream job if you’re gone in a year? [FINS]

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Here’s some news that should be comforting not only to former Goldman Sachs board member Rajat Gupta, but anyone who has in the past or is considering in the future leaking non-public details about a company to a hedge fund manager who’ll proceed to trade on them– should you be caught on tape doing just that, criminal charges are unlikely.

Prosecutors in the trial of Rajaratnam this week played a tape of the call in which the former Goldman Sachs board member chatted casually with the hedge fund manager about the bank’s talks on buying Wachovia or AIG…The exchange, along with additional government allegations divulged in recent weeks, isn’t a smoking gun that shows Gupta meant to break the law, said Tom Dewey, a lawyer at New York’s Dewey Pegno & Kramarsky LLP. Richard Scheff, who practices criminal law and isn’t involved in the case, called the prospect of charges “unlikely.”

Early in the trial, prosecutors displayed a photograph of Gupta on a video screen while Assistant U.S. Attorney Jonathan Streeter told jurors he was a “co-conspirator” who leaked tips about Goldman Sachs’ earnings and a 2008 investment in the bank by Warren Buffett’s Berkshire Hathaway Inc. Within minutes of attending two board meetings, Gupta, 62, called Rajaratnam, 53, who traded on the tips, Streeter said. Prosecutors on March 15 played a wiretap recording of the July 29, 2008, telephone call between Gupta and Rajaratnam. In it, Rajaratnam asked about a “rumor that Goldman may look to buy a commercial bank.” In response, Gupta said, “Yeah, this is being discussed” and that the board was “divided” on suggestions that it purchase Wachovia…Streeter said the government also has an October 2008 wiretap recording of Rajaratnam in which the fund manager tells “employees” that “he was told by a Goldman Sachs board member that the investment bank was losing $2 a share,” Streeter said.

So the key takeaway here seems to be that if you act natural, if you keep things “casual,” like you’re just calling to say hey, shoot the breeze, mention some stuff that’s been going on at work and see what’s on tap for the weekend, you should be okay.

Gupta Tapes Not Enough For Charges In Galleon Case [Bloomberg]

Earlier: Goldman Sachs Board Member Couldn’t Wait A Single Second To Pass Insider Information To Raj Rajaratnam

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People helping people is all this is about.

Kumar has admitted accepting $1.75 million from Rajaratnam, a one-time billionaire, in exchange for supplying tips on McKinsey clients, including chipmaker Advanced Micro Devices. On the witness stand, he recounted that the Galleon Group hedge fund founder told him: “You work very very hard. You are underpaid. People are making fortunes … so just keep track of your knowledge and share it with me.”

And for this he should be punished? If helping out a friend in such a way is wrong, Raj doesn’t want to be right. Also, who’s to say Raj was looking for ‘knowledge’ about publicly traded companies? He could’ve very well been asking Kumar to share his formidable pop culture knowledge as Big R geared up for trivia night and the request was misinterpreted. The defense rests!

Ex-McKinsey partner tells jury he tipped Rajaratnam [Reuters]

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Jury selection for the trial of hedge fund manager Raj Rajaratnam has been officially completed and opening statements will be heard this afternoon. The details on the final group are scant, but here’s what’s known:

* There are twelve jurors
* There are six alternates
* Of the A-team, there are five men and seven women

Will those odds work in what some might consider to be a heartthrob’s favor? Place your bets.

Galleon Jury Gets Seated [WSJ]

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This could set a precedent for all future accused insider traders.

Rajaratnam came to court with seven lawyers. There is a row of two tables reserved for the defendant and his lawyers and Rajaratnam is sitting at a seat at the far left of the second table, as far away from the jury box as possible. In the first row are his lead defense lawyers, John Dowd and Terence Lynam of Akin Gump Strauss Hauer & Feld LLP.

Rajaratnam Trial Begins [Bloomberg]

Related: “In the conference room was a dwarf whom Mr. Rajaratnam introduced as an analyst hired to cover “small-cap” stocks. He was, in fact, an actor hired for an April Fool’s Day gag.”

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As you may have heard, the Galleon insider trading trial kicks off this week, with Raj Rajaratnam himself expected to take the stand at some point. Like every trial by jury, the process of selecting jurors proved a formidable task, given the complicated nature of the case, and that the defense needed to make sure the fate of their client would not be left to biased individuals, with certain opinions about Wall Street and Raj in particular. The thing about prejudice, though, is that it doesn’t always present itself in the most direct possible way. Few people will probably offer, for example, that they’re “of the mind that anyone working in the financial services industry is a greedy, corrupt bastard guilty of whatever he or she has been accused of,” but if you took a gander at their reading material and saw highlighted and underlined articles by a certain writer for Rolling Stone you might get an inkling of their point of view. To that end, the questionnaire potential jurors were asked to fill out for the Galleon trial hit on every possible area where one’s bias could be revealed. Here’s a sampling of the questions asked:

* Do you like to read books? ______ Yes ______ No If yes, What types of books do you read? ___________________________________

* What TV shows, newscasts, radio shows and internet websites do you enjoy on a regular basis?

* Do you have strong positive or negative views about any of the following individuals. Federal law enforcement agencies, such as the FBI? ____ Yes ____ No Wall Street Executives? ____ Yes ____ No Technology Company Executives ____ Yes ____ No Prosecutors? ____ Yes ____ No Defense Counsel? ____ Yes ____ No If Yes, what are your views? ___________________________________

* Hedge Funds have been reported in the news over the past few years. Do you have any feelings concerning this industry? ____ Yes ____ No If Yes, please describe your feelings: _________________________

* How knowledgeable or familiar do you consider yourself to be about Hedge Funds? Please explain.
_____________________________________________________________

* How honest do you think Wall Street Executives are?
1 Not at All Honest
2 Below Average Honesty
3 Average Honesty
4 Above Average Honesty
5 Extremely Honest
Please explain your answer. ________________________

And here are some questions posed in a follow-up session:

* Do you like to eat? ______ Yes ______ No If yes, What types of foods do you eat? _____________________

* Do you have any feelings concerning big boned people? __ Yes __ No If Yes, please describe your feelings: _____________

* Do you think the SEC has done an acceptable job over the last several years? __ Yes __ No If Yes, please describe your feelings: ____________

* Fuck/Marry/Kill: Jim Cramer, Lloyd Blankfein, Maxine Waters

* Have you or anyone known to you personally ever used any of the following terms: bankster, traderster, hedge fundster?

* Are you or have you ever considered becoming a Matt Taibbi reader?

* Do you think anyone on Wall Street has ever worked an honest day in their life?
1 Not at All Honest
2 Below Average Honesty
3 Average Honesty
4 Above Average Honesty
5 Extremely Honest
Please explain your answer. ________________________

* Do you have any feelings about dead hookers? __ Yes __ No Do you feel it more likely than not that, if accused of doing something to a hooker, a Wall Street Executive is probably guilty? __ Yes __ No Do you think most people on Wall Street have probably killed a few hookers? __ Yes __ No Are today’s Wall Street Executives the types of people who would kill hookers? __ Yes __ No If accused of killing a hooker, is it more likely than not that a Wall Street Executive is guilty? __ Yes __ No If you answered Yes to any of the questions above, please describe your feelings: 10 ________

Galleon Jurors Asked About Wall Street Greed [NYP]

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Will no one stay strong with Raj?! Come on!

The guilty plea Wednesday by Adam Smith comes as prosecutors are preparing to bring Galleon founder Raj Rajaratnam to trial late next month. A second Galleon employee, Michael Cardillo, is expected to plead guilty later Wednesday, a person familiar with the matter said. Both men are cooperating with federal prosecutors in Manhattan and could be among the witnesses called at Mr. Rajaratnam’s trial on conspiracy and securities-fraud charges. Mr. Smith is the 18th person to plead guilty in the probe.

“I knew what I was doing was wrong and I am forever remorseful about this terrible mistake,” Mr. Smith said.

[WSJ]

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Robert Khuzami can’t even look at you people.

The SEC alleges that Robert Feinblatt — a co-founder and principal of New York-based hedge fund investment adviser Trivium Capital Management LLC — and Trivium analyst Jeffrey Yokuty engaged in insider trading in the securities of Polycom, Hilton, Google and Kronos. The SEC further alleges that Polycom senior executive Sunil Bhalla and Shammara Hussain, an employee at investor relations consulting firm Market Street Partners that did work for Google, tipped the inside information that enabled the insider trading by Feinblatt and Yokuty on behalf of Trivium’s hedge funds for illicit profits of more than $15 million.

“Today’s action reveals disturbingly corrupt arrangements — faithless company executives who secretly pass corporate information to hedge fund managers willing to violate the law for profit,” said Robert Khuzami, Director of the SEC’s Division of Enforcement. “Market participants need to understand that by engaging in such behavior they invite SEC scrutiny, and we will uncover their conduct and take aggressive action.”

Update: Reuters’s Matthew Goldstein notes a Stamford connection: “Feinblatt, who shut his Trivium Capital Management firm in late 2008, was charged with getting confidential tips from Galleon cooperating defendant Roomy Khan. Khan had worked as a consultant to Feinblatt, who started his fund after leaving SAC Capital in 2002.”

SEC Charges New York Hedge Fund and Wall Street Professionals in Galleon-Related Enforcement Action [SEC]

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