Morgan Stanley banker probed over Galleon fraud case

US prosecutors are probing a Morgan Stanley banker Kamal Ahmed over leaking information about an upcoming takeover that ultimately was passed on to Galleon Group founder Raj Rajaratnam, the Wall Street Journal reports, citing unnamed sources with the knowledge of the matter.

Ahmed is the first Wall Street banker investigated publicly over Galleon whose founder Rajaratnam faces insider trading charges, the Journal said.

A January 20 letter from prosecutors to Rajaratnam's lawyers shows that the Morgan Stanley banker around May 2006 leaked details of Advanced Micro Devices Inc's interest in buying ATI Technologies Inc, and that news of a pending takeover was later funneled to Rajaratnam.

The letter had blacked out the identities of the banker and the person who allegedly tipped Rajaratnam.

"Ahmed is cooperating with Morgan Stanley in its investigation and we are confident when all the facts are known it will be shown that he did nothing illegal or unethical," Ahmed's lawyer, Douglas Tween, told the Journal.