NEW YORK (Reuters) – U.S. prosecutors are relying heavily on three convicted informants, including a former associate of now-imprisoned Galleon Group founder Raj Rajaratnam, in the insider trading trial of a California hedge fund manager, a jury heard on Tuesday.
Whitman Capital founder Doug Whitman illegally used inside sources to get “a sneak peak” on the financial performance of Google Inc GOOG.N, Polycom Inc PLCM.N and Marvell Technology Group Ltd (MRVL.O) between 2006 and 2009, prosecutor Christopher LaVigne said in opening arguments on Tuesday in Manhattan federal court.
Whitman’s lawyer, David Anderson of law firm Sidley Austin, told the jury in his opening statement that his client was a career research analyst and trader in technology company stocks who “did not pay or corrupt anyone for inside information.”
The hedge fund manager is charged with securities fraud and conspiracy in making $900,000 illegally on inside information, the latest strand of the high-profile Galleon hedge fund prosecutions against dozens of money managers and traders over the past three years. All pleaded guilty or were convicted at trial.
The charges carry a combined possible maximum prison term of 25 years.
A key trial witness will be Roomy Khan, a one-time associate of Rajaratnam. Rajaratnam was convicted in May 2011 and is serving 11 years in prison. Khan pleaded guilty to a conspiracy charge and has yet to be sentenced.
Khan and Whitman were once neighbors in Atherton, California. Two other prosecution witnesses are Karl Motey, a trader and researcher, and Wesley Wang, a hedge fund consultant.
LaVigne told the jury that, while all three had been charged and pleaded guilty to insider trading crimes, “they can tell you in their own words what they saw and heard the defendant do.”
All three are cooperating in the hopes of staying out of prison, defense lawyer Anderson said.
“They are three desperate people making false accusations,” Anderson said.
The case is USA v Doug Whitman in U.S. District Court for the Southern District of New York, No. 12-125. (Editing by Andre Grenon)