Two Reasons The Raj defence Team Is Nervous About Monday's Star Witness

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This afternoon, former Galleon trader Adam Smith, is expected to testify in the Raj Rajaratnam insider trading trial. He’s already pleaded guilty to insider trading.

And the defence has already made attempts to diminish the damage his testimony could do their case.

Smith told prosecutors that after Raj was arrested in 2009, his brother Rengan raced to the Galleon office and “took his sibling’s notebooks,” Bloomberg reports.

Raj’s attorneys want Judge Holwell to prevent Smith from testifying about Rengan’s notebook removals because they say that Raj “while under arrest, had no control over his brother’s actions” and that the documents were taken because a defence lawyer had wanted them to prepare for a bail hearing.

“It would be impermissibly prejudicial, and of no probative value whatsoever, for the government to elicit testimony suggesting that Mr. Rajaratnam and his brother were concealing evidence,” Raj’s attorney John Dowd wrote, according to the WSJ.

But obviously the government is keen to have the testimony included because they say it will help “prove the existence of the charged conspiracy and Rengan’s membership in it,” according to the letter sent to the court.

Smith reportedly met up with Rengan twice in Spring last year. During one of those meetings, “Rengan asked about Smith’s “little black book of information” and wanted “to confirm” that he “was not going to say anything about the notebooks or black book” according to Bloomberg.

And there’s more — they also want Smith to be free to discuss what he told the FBI about Raj’s plan involving Morgan Stanley banker, Kamal Ahmed.

From Bloomberg,

Prosecutors also want Smith to testify about statements Rengan allegedly made to him months after Raj Rajaratnam’s arrest.

“Rengan told Smith that, when someone discussed ‘Kamal’ with Raj, Raj would say it was a reference to Kamal Das, a sell- side analyst (and not Kamal Ahmed, a Morgan Stanley investment banker whom the government intends to prove provided inside information to Smith, which Smith in turn provided to Raj),” Assistant U.S. Attorneys Jonathan Streeter and Reed Brodsky wrote in their filing.

Don’t miss Rengan flipping out about news of a deal hitting newspapers in one of the government’s wiretaps > 

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