'Insider trading' phone call about AMD stocks played to Galleon jury

Conversation forms last-minute evidence from prosecution in trial of Raj Rajaratnam

Lawyers for the defence of Raj Rajaratnam, who is accused of inside trading on stocks including AMD, Intel and IBM, have rested their case in New York.

Their evidence included testimony that they said proves the trades made by the Galleon Group founder were not based on insider information.

Prosecutors for the case responded to the defence's evidence by playing a recording of a phone call between Rajaratnam and Danielle Chiesi, a former Bear Stearns hedge fund manager, according to the Financial Times.

In the call, Chiesi is heard questioning why anyone would buy AMD shares on 30 September 2008, a date one week ahead of a major transaction by the company. "That is a very bold move to make, unless you know what we know," she is heard saying.

In the recording Rajaratnam responded: "It's been widely speculated. What people don't know is the time." He then says it is "the seventh", which the prosecution says refers to 7 October, the date when AMD made public the sale of its chip-manufacturing operations to the wealth fund of Abu Dhabi.

Chiesi, according to earlier government witness testimony, had also had an "intimate" relationship with a former chief executive at AMD. The executive, Hector Ruiz, refuted the comments. He is not charged in the case.

The defence claims Rajaratnam made trades based on thorough research, not on secret tips he received from company insiders.

Rajaratnam actually lost money on the 7 October AMD trades. He faces more than 15 years in prison if convicted of insider dealing involving various companies, the FT reported.

Last month, a former Intel executive admitted passing on company information to Rajaratnam. Rajiv Goel, who is acting as a witness for the prosecution and who has already pleaded guilty to securities fraud, was a technology investment adviser within Intel's finance office.

All the evidence will now be considered by a jury.

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Antony Savvas

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