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Rajaratnam advised Chiesi to buy 1 million shares of tech stock on an inside tip, then sell 500,000 of those shares — a tactic prosecutors say was used to throw regulators off the trail. In another instance, about 30 minutes of calls with an Intel tipster scored Rajaratnam a $2 million windfall on the computer chip-maker’s stock, prosecutors said.

Former financial consultant Anil Kumar testified that he and Rajaratnam — his former classmate at the University of Pennsylvania’s prestigious Wharton School — broke the law by speaking regularly about the negotiations over the acquisition of ATI Technologies Inc. by Kumar’s client, Advanced Micro Devices Inc., before the deal was announced.

“I told him that this was ‘red hot’ and shouldn’t be discussed,” Kumar said. Later, he said he cautioned the defendant, “This is going to be a complete shock to the industry … so treat this with the strictest of confidence.”

Prosecutors say Rajaratnam raked in $20 million by trading on his advance notice of the ATI-AMD deal. Afterward, he called Kumar at home and said, “You’re a star,” Kumar told the jury in federal court in Manhattan.

When Rajaratnam later informed Kumar that he would be rewarded with a $1 million kickback, “I almost fell off my chair,” the witness said.

The Galleon probe has resulted in more than two dozen arrests and 21 guilty pleas. It also has led to a second investigation aimed at consultants in the securities industry who pass off inside information as the product of legitimate research.

Only Rajaratnam has gone to trial and relived conversations that the insiders never suspected were being monitored. On one tape, Rajaratnam sounded sheepish when one particularly effusive tipster praised him for being a star in the hedge fund universe.

“The myth,” Rajaratnam said, “is larger than the reality.”