• Rajaratnam and Chiesi plead not guilty criminal trial before NY judge
  • Lawyers object to government's "strategic advantage" through trial timings
  • Prosecution yet to reveal wiretap evidence

Two key defendants in the Galleon insider dealing case pleaded not guilty in a New York courtroom on 22 December. The criminal proceedings, which are scheduled to begin in June or July 2010 and to last a month, have been described as the biggest ever hedge fund insider trading case and precede a parallel Securities and Exchange Commission inquiry (SEC) prosecution (http://www.sec.gov/litigation/complaints/2009/comp21255.pdf) scheduled to commence in August 2010.

Appearing before the Manhattan federal court Galleon Management's founder Raj Rajaratnam and his co-defendant Danielle Chiesi entered not guilty pleas to charges which will be based on some 100 hours of phone-tapped conversations. Reuters news agency reports that while Rajaratnam and Chiesi are the only defendants to be formally indicted, some 21 others have been charged in criminal or civil proceedings including employees of IBM, McKinsey & Co and Intel Capital.

At the heart of the case are allegations that those involved passed information relating to the profitability and general business of ten listed technology companies and that up to $30 million of profit was generated as a result – over $20 million of which was made by Rajaratnam and Chiesi.

Soon after the plea Rajaratnam's lawyers objected to the United States government's request that the criminal trial should be held prior to the SEC case. Lawyer John Dowd said in a letter to the presiding judge that the government should not "attempt to manufacture the order of its trials solely in a manner that suits its strategic interests."

The lawyer also informed the judge that the prosecution had failed to provide the defence team with the wiretap intercepts which are expected to make up the case against Rajaratnam and his co-defendants.

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