Rengan Rajaratnam said to be in custody on insider charges

Rengan Rajaratnam, the younger brother of imprisoned hedge-fund founder Raj Rajaratnam, was taken into custody by FBI agents yesterday when he arrived at John F. Kennedy International Airport on a flight from Brazil, a person familiar with the matter said.

Rajaratnam was indicted by a federal grand jury in New York on charges he took part in an insider-trading scheme tied to his brother’s fund, Galleon Group LLC. Rengan Rajaratnam, 42, is accused of conspiring with his brother Raj to trade in 2008 on material nonpublic information about Clearwire Corp. and Advanced Micro Devices Inc., Manhattan U.S. Attorney Preet Bharara said.

Rengan Rajaratnam was accompanied on the flight by FBI agents who arrested him once on U.S. soil, said the person, who asked not to be identified because they aren’t authorized to speak publicly on the matter. Rajaratnam is set to appear today for an initial hearing in Manhattan federal court.

Prosecutors alleged that Rengan, while working as a fund manager at Galleon, made almost $1.2 million from trades that occurred on March 24 and March 25 of that year based on tips provided by his brother and his Rolodex of insiders. He was implicated during his brother’s trial, where wiretapped conversations between the two men were played in court.

‘Shared More’

“Rengan Rajaratnam and his brother shared more than DNA,” Bharara said last week. “Along with his brother Raj, Rengan Rajaratnam was allegedly at the heart of an insider-trading scheme that swept up an unprecedented number of people.”

Bharara’s office has charged and won convictions against more than 75 people over the past 3 ½ years as part of its broader insider trading crackdown, including more than two dozen people tied to the Galleon probe.

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