NEW YORK, (Reuters) - Galleon Group founder Raj Rajaratnam and five others charged a month ago in the biggest U.S. hedge fund insider trading case will be in talks with prosecutors for at least another month over the allegations against them, court documents said on Monday.
Rajaratnam in talks with U.S. for at least another 30 days
Prosecutors and lawyers for the six accused "have been engaged in, and are continuing, discussions concerning a possible disposition of these cases," according to documents filed in Manhattan federal court. Rajaratnam, a Sri Lankan-born billionaire, and the other five were arrested, charged and released on bail on Oct. 16. They could be indicted, plead guilty or go to trial.
"The government has requested continuance of 30 days to engage in further discussions with counsel about disposition of these cases," the documents filed by the office of the U.S. Attorney for Manhattan said.
Each defendant had waived the right to be charged in an indictment or an alternative charging document known as an "information" for the next 30 days only, the documents said. A spokesman for Rajaratnam's lawyer declined to comment on Monday, but in court papers, the lawyer, John Dowd, has indicated he wants the case to go to trial.
Galleon selling out Sri Lankan investments
Raj Rajaratnam has begun selling out sizable investments held by his Galleon Fund in Sri Lanka to settle the company’s US debt, after the former was charged with insider trading.
Brokers in Colombo said that by the end of the week, Galleon had sold its entire stock in Commercial Bank and a large slice of the stock it holds in Hatton National Bank. Rajaratnam’s personal stake in John Keells Holdings of over 8% is yet to be sold, brokers said.
In all, 20 people face criminal charges, civil charges or both in the investigation that drew in employees of major U.S. corporations such as International Business Machines Corp (IBM.N), the venture capital arm of Intel Corp (INTC.O) and management consultants McKinsey & Co.
Prosecutors have alleged $40 million of illegal profits while the U.S. Securities and Exchange Commission has specified $53 million in its civil investigation.
At least five people have pleaded guilty to charges, hoping to receive a reduced sentenced for their cooperation with the government's investigation.
The cases are USA v Rajaratnam et al, U.S. District Court for the Southern District of New York, No. 09-mj-2306 and USA v. Chiesi 09-mj-2307 in the same court.