ANIL KUMAR, a former McKinsey director, told a judge he leaked inside information to Galleon Group LLC founder Raj Rajaratnam over five years in return for $1.75 million.
Mr Kumar yesterday became the seventh person to plead guilty in the wide-ranging insider-trading case as he implicated Mr Rajaratnam. He has also agreed to testify against the hedge fund founder in a bid for leniency.
“Anil, you’re a hero,” Mr Rajaratnam told Mr Kumar after Galleon earned $19 million by trading on secret tips about Advanced Micro Devices acquisition of ATI Technologies in 2006, according to assistant US attorney Jonathan Streeter, who outlined the charges in Manhattan federal court.
Mr Kumar’s co-operation strengthens the US case against Mr Rajaratnam, the Sri Lankan-born founder of Galleon who was indicted last month on charges he earned $17 million through inside stock tips from corporate officials and hedge fund executives.
The government later alleged that Mr Rajaratnam made $19 million in the AMD deal.
Among those who have pleaded guilty and agreed to testify against him are former Intel executive Roomy Khan and at least one other person whom prosecutors did not name in a November court filing. The government’s case is also based on taped recordings of his phone conversations.
Mr Rajaratnam, free on $100 million bail, has pleaded innocent.
He is scheduled to appear in court on January 12th in a bid to get his bail reduced. Mr Kumar yesterday said that Mr Rajaratnam approached him in late 2003 or early 2004 and offered to pay him $500,000 annually in exchange for tips about McKinsey clients.
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