Raj Rajaratnam’s defense to insider-trading charges, which could start next week, may rest in part on the testimony of a former chief economist to the Securities and Exchange Commission who has found nothing improper with stock trades by the Galleon Group LLC co-founder.
Gregg Jarrell, who was the SEC’s top economist from 1984 to 1987 and now teaches at the University of Rochester’s graduate school of business in New York, will testify about Rajaratnam’s trades in Goldman Sachs Group Inc. stocks and dozens of other companies. If permitted by the judge, he’ll say that allegedly illegal tips involved information that was already public or immaterial or had been incorporated into Galleon research by the time Rajaratnam got them.
Rajaratnam, 53, is charged in the largest crackdown on hedge-fund insider trading in U.S. history. The Sri Lankan-born money manager is accused of making $45 million from tips by corporate insiders. Rajaratnam denies wrongdoing, saying he based trades on research and published sources.
