Additional charges in hedge fund insider trading case (Reuters)  (10-02-2010)

NEW YORK (Reuters) - Additional criminal charges were filed on Tuesday against Galleon hedge fund founder Raj Rajaratnam as prosecutors alleged he and his co-defendant reaped $49 million from illegal insider trading, up from an earlier claim of $40 million.

In the parallel civil case against Rajaratnam and co-defendant Danielle Chiesi, a judge ordered the two defendants to turn over wiretaps to the U.S. Securities and Exchange Commission. In a letter to Manhattan federal court Judge Jed Rakoff on Tuesday night, Rajaratnam's lawyers asked him to stay the order pending an appeal.

Thousands of wiretaps were made in the criminal probe between 2003 and 2009 involving Wall Street and Silicon Valley firms that was announced last October, but lawyers for the defendants and the SEC have been tussling over their use in the parallel civil fraud case.

Rajaratnam, 52, and Chiesi, 44, a former employee of New Castle Funds LLC, were arrested last October and indicted in December on charges of securities fraud and conspiracy in what prosecutors have described as the biggest hedge fund insider trading case in the United States.

The new indictment adds two more counts of securities fraud against Rajaratnam. In a letter to the court on Tuesday, his lawyers said they would ask the judge presiding the criminal case to order a separate trial from Chiesi.

The cases are USA v Raj Rajaratnam and Danielle Chiesi, U.S. District Court for the Southern District of New York, No. 09-01184 and SEC v Galleon Management LP et al 09-cv-08811.

Source: Reuters