At Raj Rajaratnam’s Galleon Group hedge fund, “boasting or bragging” about phony corporate connections was commonplace, a Manhattan federal jury was told yesterday.
In fact, Galleon traders and analysts spoke of tipping off famed investor George Soros and getting inside information from Kraft Foods CEO Irene Rosenfeld, said Gary Naftalis, the lawyer for accused insider trader Rajat Gupta.
“In your personal observation, did people at Galleon exaggerate their sources of information? Yes or no?” Naftalis asked Galleon trader turned government informant Michael Cardillo.
Cardillo said it happened, but only on “rare occasions.”
Naftalis raised the issue of “boasting or bragging” at Galleon in an attempt to suggest that rather than his client actually tipping Rajaratnam, as the government had claimed, Gupta’s name was being used as a simple boast.
Earlier in the trial, which kicked off last week, Naftalis told the jury the government snagged the wrong guy because Rajaratnam, who’s serving an 11-year prison sentence after being convicted of insider trading, had “sources all over town.”
Cardillo, who has been testifying on and off since Friday, has told jurors that when he was at Galleon, he traded two stocks based on tips from “Raj’s guy” at Procter & Gamble, whom the government contends is Gupta.
Cardillo said he shorted P&G’s shares in 2009, for example, after Rajaratnam’s brother, RK Rajaratnam, told him the company was about to cut its sales forecast. RK said the tip, which proved to be correct, came from “Raj’s guy on the P&G board.”
In the downtown Manhattan courthouse yesterday, Naftalis asked Cardillo if he remembered an untrue boast concerning Rajaratnam tipping hedge-fund billionaire Soros on technology giant Intel.
“I remember something about Intel and Soros. I don’t remember Raj being involved,” Cardillo replied.
Naftalis also asked Cardillo about a Galleon analyst who once claimed he got a tip from the CEO of women’s clothing retailer Chico’s — only to recant the claim later.
Cardillo was blocked from answering the question amid objections.