The U.S. Securities and Exchange Commission wants to expand its lawsuit in the widening Galleon hedge fund probe to add new charges against two defendants, Galleon founder Raj Rajaratnam and former McKinsey & Co director Anil Kumar.

The SEC sought permission in a Wednesday filing in Manhattan federal court to amend its civil complaint against 21 defendants, in what investigators have described as the largest hedge fund insider trading case ever.

The SEC said it learned of an arrangement under which Rajaratnam paid Kumar for insider tips, and used them to generate almost $20 million of illegal profits for Galleon.

It said tips on chipmaker Advanced Micro Devices Inc's 2006 purchase of ATI Technologies Inc generated more than $19 million of profit, and concerning online auctioneer eBay Inc generated more than $500,000 of profit.

Kumar on January 7 pleaded guilty to federal fraud and conspiracy charges, saying Rajaratnam paid him $1.75 million in exchange for tips on McKinsey clients.

Rajaratnam, widely described as a billionaire, was indicted last month for insider trading that prosecutors have said may have resulted in $41 million or more of illegal profits. He pleaded not guilty.

The government's criminal case is separate from the SEC's civil case. The SEC said no defendants in its case will be prejudiced by its request to amend its complaint, saying that parties are still exchanging documents and that discovery will continue through April.

It said a hearing on its request is scheduled for the afternoon of January 25 before U.S. District Judge Jed Rakoff. Defendants have until January 22 to oppose its request, it said. The SEC filed its first complaint in the case last October 16.

The case is SEC v. Galleon Management LP et al, U.S. District Court, Southern District of New York, No. 09-08811.

(Reporting by Jonathan Stempel. Editing by Robert MacMillan)

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