By Nate Raymond
NEW YORK (Reuters) - A former McKinsey & Co partner whose testimony helped convict Raj Rajaratnam for insider trading returned to court on Thursday to testify against the Galleon Group founder's younger brother, Rengan Rajaratnam.
Anil Kumar, once a top partner at the elite consulting firm, told jurors in New York federal court that for years he leaked information to Raj Rajaratnam about his client Advanced Micro Devices Inc
"I had no business talking to him about AMD," Kumar said.
The testimony marked the second time this week jurors heard directly from someone who prosecutors say provided confidential information to the one-time hedge fund billionaire, who in turn allegedly gave it to Rengan Rajaratnam.
Prosecutors accuse Rengan Rajaratnam, 43, of conspiring with his brother to trade on illegal tips about AMD and Clearwire Corp in 2008. He has pleaded not guilty to three counts of conspiracy and securities fraud.
The AMD tip came after McKinsey was hired to advise the chip maker on spinning off its manufacturing business into a new entity. As part of the deal, later announced in October 2008, an Abu Dhabi state-owned company agreed to invest in both AMD and the new entity.
In an Aug. 15, 2008, recorded phone call played in court, Kumar told Raj Rajaratnam that "they've shaken hands" on a deal involving an investment of $6 billion to $8 billion.
About three hours later, Rengan Rajaratnam called his older brother, who told him "that AMD had a handshake with the ... the Arabs," according to another recording played in court.
"The Arabs to put $6 billion. I'm buying some, I bought, I am buying two fifty for you, OK?" Raj Rajaratnam said.
"All right, thanks a lot, man, I appreciate it," Rengan Rajaratnam said.
Kumar, 55, said he had known Raj Rajaratnam, 57, since the 1980s but did not begin giving him confidential information until 2004.
Rajaratnam paid him nearly $2 million over several years, Kumar said, sending funds to a Swiss bank account not in Kumar's name that would then be wired back into a Galleon account in the name of Kumar's housekeeper.
While Kumar said Rajaratnam hired him to provide advice, he began providing confidential information.
"I thought I was on the right side of a gray line, and I crossed that line," Kumar said.
Kumar was fired from McKinsey soon after the FBI arrested him, Raj Rajaratnam and others in October 2009 in connection with the scheme.
He pleaded guilty in January 2010 to conspiracy and securities fraud. He was sentenced to two years of probation in 2012, after testifying in the insider trading trials of Raj Rajaratnam and Rajat Gupta, who once headed McKinsey.
Rajaratnam is serving an 11-year prison term after being convicted in 2011. Gupta, a former Goldman Sachs Group Inc
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 and Steve Orlofsky)