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Prosecutors to File New Indictment in Galleon Case

Federal prosecutors said they intend to file a new indictment against hedge fund mogul Raj Rajaratnam, charged last year in a sweeping insider trading case.

Raj Rajaratnam
Raj Rajaratnam

Authorities say they have new evidence the Galleon Group co-founder earned more than twice what they originally suspected from the alleged illicit trading — $36 million instead of the $17 million originally thought.

The revelations come in a court filing late Tuesday opposing Rajaratnam's request for a reduction in his $100 million bail. A hearing on the bail matter is scheduled for Friday.

Authorities initially charged Rajaratnam in a criminal complaint in October. A federal grand jury indicted him last month. But since the indictment, prosecutors say, they learned Rajaratnam netted an additional $19 million by trading ahead of the 2006 acquisition of ATI Technologies by Advanced Micro Devices .

The filing says Rajaratnam "obtained material, nonpublic infomation" about the deal from an inside source to whom he had been making "large payments" since 2004. The filing says the new charges make Rajaratnam even more of a flight risk, and argues his bail should not be reduced.

But Rajaratnam's attorney, in a statement emailed to CNBC, denies his client had any knowledge of the ATI acquisition. John Dowd said, "An analyst’s prediction that AMD would acquire ATI was widely reported in the press more than seven weeks before the acquisition was announced."

Rajaratnam pleaded not guilty at his arraignment last month, and Dowd has vowed his client will fight the charges. Prosecutors did not say when they plan to file the new indictment.

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