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Rengan Rajaratnam, the younger brother of convicted Galleon Group founder Raj Rajaratnam, was cleared on Tuesday of conspiring to engage in insider trading while at the hedge fund, ending a five-year winning streak by U.S. prosecutors.
After deliberating for less than four hours, a federal jury in New York found Rengan Rajaratnam, a former portfolio manager at Galleon, not guilty of the one conspiracy count he faced following the mid-trial dismissal by a judge of two more serious fraud charges.
Rajaratnam, 43, who was living in Brazil at the time of his indictment, hugged his lawyers after the jurors were dismissed.
"You can go back to Brazil for the finals," U.S. District Judge Naomi Reice Buchwald said, referring to the World Cup.
"Absolutely," Rajaratnam said.
Three years after jurors in the same courthouse convicted Raj Rajaratnam, 57, for an insider trading scheme that resulted in $63.8 million in illicit profit. He is serving an 11-year prison sentence.
Before Tuesday, a crackdown on insider trading led by Manhattan U.S. Attorney Preet Bharara's office had resulted in the conviction of 81 people with no acquittals since October 2009.
"While we are disappointed with the verdict on the sole count that the jury was permitted to consider, we respect the jury trial system whatever the outcome," Bharara said in a statement.
Several jurors said prosecutors failed to show Rengan Rajaratnam knowingly conspired with his brother.
"We felt like a lot of the trial was about Raj," said juror Catherine Wolcott, a graphic designer. "We were waiting to hear more about Rengan, who was the actual person on trial. By the end, we were all like, 'Where's the evidence?'"
The acquittal followed significant setbacks in the case. Rengan Rajaratnam faced six counts of securities fraud and the conspiracy charge when first indicted in March 2013.
Four securities fraud charges were dropped pretrial and Buchwald dismissed two fraud counts for lack of evidence after the prosecution rested its case.
The government claimed a tip to Raj Rajaratnam in March 2008 - that Intel Corp was planning to invest $1 billion in technology company Clearwire - enabled Galleon to reap $700,000 and Rengan to earn $100,000.
Prosecutors said the tip came from Rajiv Goel, a former Intel executive who pleaded guilty in 2010 and was sentenced to two years of probation.
After Buchwald tossed out charges that Rajaratnam traded in Clearwire, prosecutors were limited to arguing the brothers conspired to engage in insider trading in the company and Advanced