Rengan Rajaratnam still faces a criminal count of conspiracy, but U.S. District Judge Naomi Reice Buchwald at a hearing in Manhattan dismissed other counts related to improper trading in technology company Clearwire Corp.
Buchwald said the issue was whether Rengan Rajaratnam traded on inside information about Clearwire knowing the tipper breached his duties to keep it secret and in exchange for a personal benefit.
"I find a reasonable jury could not so find," she said.
The decision came shortly after prosecutors rested in presenting evidence in the latest in a string of insider trading cases pursued by Manhattan U.S. Attorney Preet Bharara.
The decision, which is not appealable, spared Rajaratnam from the most serious charges he faced. Each carried a maximum term of 20 years in prison, compared with the five years he faces on the conspiracy count.
Rajaratnam's lawyer, Daniel Gitner, argued Tuesday for the judge to also dismiss that remaining count. Buchwald adjourned without ruling, though she indicated she would likely send that count to the jury.
Gitner and a spokesman for Bharara declined comment.
Prosecutors had accused Rajaratnam of conspiring with his older brother to trade on inside information about technology companies Clearwire Corp and Advanced Micro Devices Inc in 2008.
Prosecutors contended that a tip to Raj Rajaratnam in March 2008 - that Intel was planning to invest $1 billion (£583.1 million) in Clearwire - helped Galleon reap $700,000 and Rengan to earn $100,000.
The government said the tip came from Rajiv Goel, then an Intel Corp executive and friend of Raj Rajaratnam, who testified in Rengan's trial on June 24. Goel pleaded guilty in 2010 to charges stemming from the scheme and received two years' probation.
Raj Rajaratnam had helped Goel financially, earning his friend $700,000 to $800,000 trading in his personal account at his request. Raj Rajaratnam also lent him $100,000 in 2005 in connection with a home purchase and gave him $500,000 to help keep a family property in Bombay.
But on Tuesday, Gitner argued no evidence had been presented to establish that Rengan Rajaratnam knew who Goel was, let alone that he was receiving anything from supplying tips to his brother, a position adopted by Buchwald.
"There is no evidence in the record that Raj ever shared the name Goel with Rengan," Buchwald said before making her ruling.
The case is U.S. v. Rajaratnam, U.S. District Court, Southern District of New York, No. 13-00211.
(Reporting by Nate Raymond in New York; Editing by David Gregorio and Steve Orlofsky)
By Nate Raymond
