Judge edits racy recordings from Rajaratnam trial

By @ibtimes on

A judge made the high-profile insider trading trial of Galleon Group hedge fund founder Raj Rajaratnam less risque on Monday, deleting portions of phone taps to be heard by the jury.

Some of the recordings previously played for jurors have been laced with profanity, but both Manhattan federal prosecutors and Rajaratnam's defense lawyers wanted to keep out certain personal conversation involving former trader and Rajaratnam associate Danielle Chiesi and a former marketing executive at Akamai Technologies Inc .

There may be ways in which we can make them less blue, for want of a better word, prosecutor Jonathan Streeter suggested to U.S. District Judge Richard Holwell before the jury was seated. Other 'blue' language shows a close relationship.

Rajaratnam is charged with 14 counts of conspiracy and securities fraud, accused of making $45 million in illicit profits between 2003 and March 2009 on leaked stock tips. His lawyers contend that research, analysis and market speculation, not material company secrets, guided his trades.

The trial is in its fifth week. If convicted, Sri Lankan-born Rajaratnam faces as much as 20 years in prison.

One hallmark of the biggest Wall Street insider trading case in decades has been the government's use of FBI phone taps, tactics normally reserved for fighting organized crime.

Also on Monday, a U.S. prosecutor said the government would not call a key cooperating witness, former Intel Corp and Galleon employee Roomy Khan, to testify. Khan, who has been associated with Rajaratnam for more than a decade, has pleaded guilty to criminal charges but has not been sentenced.

U.S. prosecutor Reed Brodsky told the judge that phone records, trading records and instant messaging records would be presented as evidence that Khan and Rajaratnam conspired to gather earnings and other secrets about Google Inc , Polycom Inc video teleconference technology company and Hilton Hotels.

The judge's ruling on the phone tap evidence involved a conversation between Chiesi, who once worked for New Castle hedge fund and has pleaded guilty to a conspiracy charge in the Galleon case, and Kieran Taylor, a former senior marketing director at Akamai.

Taylor has not been charged with wrongdoing. Attempts to reach him for comment on Monday were unsuccessful.

Taylor was named in court documents in January as a source who allegedly provided inside information to Chiesi. His name was provided by the U.S. Securities and Exchange Commission in response to questions submitted by Rajaratnam's lawyers.

The case is USA v Raj Rajaratnam et al, U.S. District Court for the Southern District of New York, No. 09-01184.

(Reporting by Grant McCool; Editing by Tim Dobbyn)

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