Rajaratnam jury starts third week, re-hears calls

The jury at the insider trading trial of hedge fund manager Raj Rajaratnam began the third week of deliberations by asking to hear replays of FBI phone taps between the Galleon Group founder and one of the former friends who testified against him.

The jury told U.S. District Judge Richard Holwell in New York on Monday that it wanted to re-hear the secretly recorded conversations for the benefit of an alternate juror who replaced a sick juror last week. The six calls between Rajaratnam and former Intel Corp executive Rajiv Goel were played during the evidence phase of the trial and on April 27 before Juror No. 2 was excused on May 4.

Sri Lankan-born Rajaratnam is accused of making an illicit $63.8 million between 2003 and March 2009 in trades involving more than a dozen stocks. He is the central figure in what U.S. prosecutors have called the biggest-ever probe of insider trading at hedge funds.

Twenty-one out of 26 defendants have pleaded guilty in the case. A hallmark of the investigation was the use of FBI phone taps to secretly monitor his conversations. Rajaratnam, 53, faces up to 25 years in prison if he is convicted on conspiracy and securities fraud charges.

JURY CLUES

The jurors, who until Monday had deliberated for a total of eight days over two weeks, listened intently to the calls while reading the transcripts on video screens in front of their seats in the jury box. Rajaratnam sat with his lawyers, looking straight ahead. He missed three days of court last week because of a bacterial infection in his right foot.

Goel pleaded guilty to criminal charges and testified against Rajaratnam during the trial, which began on March 8.

The men were accused of conspiring to get advance word on a wireless network venture announced in May 2008 between Clearwire Corp and Sprint Nextel Corp with an investment by Intel.

Rajaratnam's lawyers argued that the information was already public, that it had been discussed in analysts' reports and Goel had no inside information to provide.

The Clearwire transaction is in the third, sixth and seventh counts of the 14-count indictment. The charges involve mostly tech stocks but also include one that Rajaratnam was tipped by Rajat Gupta, a former director of Goldman Sachs Group Inc, Wall Street's most influential bank.

The case is USA v Raj Rajaratnam et al, U.S. District Court for the Southern District of New York, No. 09-01184.

(Reporting by Grant McCool, editing by Dave Zimmerman)