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Thursday, April 25, 2024 | Back issues
Courthouse News Service Courthouse News Service

Galleon Downfall Now a War Between Brothers

MANHATTAN (CN) - One-third of the way through his 11-year sentence for orchestrating a $63 million insider-trading scheme, Raj Rajaratnam and his now-defunct Galleon hedge funds faces a lawsuit from the brother acquitted of liability.

The Galleon investigation, which prosecutors at the time had labeled the largest of its kind in history, ended with more than 80 guilty pleas and convictions.

One suspected player whom the government failed to land, however, was Raj's brother, Rengan Rajaratnam, who worked as a portfolio manager at Galleon.

It's 15 months since a federal jury acquitted the younger Rajaratnam on all the charges against him, finding that he played no role in Raj's ring.

On Thursday, Rengan's attorneys filed a summons with notice in Manhattan Supreme Court against Raj, nine Galleon entities, two of its ex-executives and two other corporate entities.

The executives include Galleon's ex-president Richard Schutte and ex-chief operating officer George Lau, whom Business Insider featured in a story titled "The Only Happy Ending to the Galleon Story," which noted the men's continuing financial careers despite their hedge funds' disastrous fall.

Two entities belonging to their new enterprise Spottail are listed among the co-defendants.

Rengan's summons is thin on details, though it demands $13.5 million for breach of contract, fraud, breach of fiduciary duty and bad faith, among many other charges.

The younger Rajaratnam also claims that the defendants did not pay his bonus and other compensation for his services as a portfolio manager and analyst in 2009.

He is represented by Jonathan Greenbaum with Coburn & Greenbaum in Washington.

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