AP Source: Hedge Boss' Brother Cited In US Probe

NEW YORK (AP) - The government has identified the brother of one-time billionaire hedge fund founder Raj Rajaratnam as a co-conspirator in what authorities have called the biggest hedge fund insider trading case in history, a person familiar with the probe said Wednesday.

The person told The Associated Press that Ragakanthan Rajaratnam is the person identified in court papers filed last week only as "CC-1." That means co-conspirator No. 1.

The person spoke on condition of anonymity because the younger brother of the hedge fund founder is not identified publicly by the government. The comments came after The Wall Street Journal first reported the development.

The Galleon fund's founder has pleaded not guilty to securities fraud charges in a case that prosecutors say has generated more than $50 million in profits. He remains free on $100 million bail.

His brother, who no longer works at Galleon, did not immediately return a call for comment left at his Oakland office at Clorox Co., where he has worked since September 2009. He previously worked at Galleon as a portfolio manager.

Kathryn Caulfield, a Clorox spokeswoman, said Rajaratnam, who refers to himself on his answering machine as "Raj" like his brother, works as vice president of global insight. His department researches consumer trends and needs and uses the research to develop marketing and innovation strategies, Caulfield said.

As to the reports stemming from the insider trading case, Caulfield said: "It's not a matter that involves the company so we would have no comment on that."

Jessie Erwin, a spokeswoman for U.S. Attorney Preet Bharara, declined to comment.

Prosecutors have accused Sri Lanka-born Raj Rajaratnam of leading an insider trading ring that enlisted the help of workers at publicly traded companies to provide secrets about upcoming earnings and acquisition announcements. Jim McCarthy, a spokesman for Rajaratnam, declined to comment Wednesday.

The investigation has since spawned an enlarged probe that focuses on firms that provide inside information disguised as expert research, according to the government.

Both probes have led to the arrests of more than 30 people with guilty pleas recorded by a dozen and a half of them.

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Associated Press writer Tom Hays contributed to this report.