A spokesman for Mr. Rajaratnam declined to comment, as did an Intel spokesman. Neither Mr. Rajaratnam nor anyone else at Galleon was contacted by the authorities regarding the events in 1998, according to a person briefed on the matter. Ms. Khan’s lawyer has yet to be identified.  Mr. Rajaratnam has been charged with running the insider trading scheme involving Galleon. He and five others are accused by the Justice Department and the S.E.C. of relying on a vast network of company insiders and consultants to make more than $20 million in profit from 2006 to 2009. In the government’s recently filed insider trading charges against Mr. Rajaratnam, prosecutors identify Ms. Khan as Tipper A and say they had exchanged insider information on Google, Polycom and Hilton.  Mr. Rajaratnam’s lawyer has said his client is innocent. He is free on $100 million bail, though his lawyers moved on Thursday to reduce that amount to $25 million.  Prosecutors have established that Ms. Khan and Mr. Rajaratnam most likely met in 1996 when Ms. Khan worked at Intel as a product marketing engineer. Mr. Rajaratnam followed Intel as a securities analyst for Needham & Company, an investment bank.  Their relationship appears to have progressed quickly, because by early 1998, Ms. Khan started faxing information about Intel’s chip sales to Mr. Rajaratnam, according to court documents and the person with knowledge of the case who has requested anonymity because court documents tied to the case remain sealed under court order.  Only a two-page summary of that 2000 case, filed in United States District Court in Northern California, is public. In it, prosecutors describe a “Galleon representative” who asked Ms. Khan to send the information about Intel. Two people with knowledge of the case say extensive surveillance was undertaken linking the two individuals.  Ms. Khan resigned from Intel before she was charged. She then went to work for Mr. Rajaratnam at Galleon in 1999, the hedge fund he created after leaving Needham. Ms. Khan was fired from Galleon the next year for violating company policy by trading options in her own account on the side, according to a person briefed on the matter, adding that she had boasted of making millions through the trades.  It was not until 2001 that Ms. Khan pleaded guilty to wire fraud. A year later, she received a sentence of six months of home detention in Atherton, Calif., and a $150,000 charge covering fines and restitution, the Federal Bureau of Investigation has confirmed.  Around 2005, Ms. Khan again asked Mr. Rajaratnam for a position at Galleon, according to the recent court filings, as she faced financial problems. While she did not secure that job at Galleon, Ms. Khan continued to trade insider information with Mr. Rajaratnam, according to federal prosecutors.  Press representatives for federal prosecutors say details of the case remain sealed because the government lawyer handling the case did not ask the court to unseal the records before he left his job. They said they did not intend to ask for the case to be unsealed. (In the documents, Ms. Khan’s named is misspelled Kahn and the documents were misfiled under that name. )  There are reasons Mr. Rajaratnam would remain unidentified in the court documents. “The two dominant explanations for not naming the individual at Galleon would be either that the individual cooperated with the government or that the investigation is continuing,” said Joseph A. Grundfest, the co-director of the Rock Center for Corporate Governance at Stanford University.  Statute-of-limitations provisions prevent prosecutors from charging the parties with a substantive insider trading violation for the 2000 case as part of the current case. However, evidence from cases older than five years may be used if prosecutors can establish that the behavior was part of a continuing conspiracy, according to Christopher P. Conniff, a partner in Ropes & Gray’s government enforcement group.  Ms. Khan’s central role in a pair of insider trading cases matches with a career that appeared anything but typical. While her roots trace back to New Delhi, Ms. Khan lived in Silicon Valley for decades with her husband, Sakhawat Khan, a chip engineer who profited from the sale of at least two start-ups.  When she was about 35, Ms. Khan obtained a master’s degree in business administration from the University of California, Berkeley. According to friends, acquaintances and family, Ms. Khan’s true passion lay with following the financial markets and trading stocks. When she left Galleon, Ms. Khan set up her own stock trading operation inside the family’s home in Atherton, one of the most exclusive Silicon Valley neighborhoods.  Ms. Khan spoke openly about her stock-picking skills and the fact that she supported the family by managing their money, said a Silicon Valley technology executive who was friendly with the couple and a relative. Mr. Khan was not working during this time and “joked about being the bum in the family,” the friend said. Ms. Khan would wake up early each morning and go to the pool house, which she had converted into her home office, log on to her computer and spend the day trading.  “She was very open about managing their own money from the house,” the friend said. “One assumed she had certain skills she had learned earlier, and was applying them.”  The Khans would often throw parties at their estate and have been described by friends and acquaintances as a charming pair.  But by 2005, the couple’s financial situation seems to have worsened as they struggled to pay debts.  Friends were puzzled when the Khans seemed to fall off the radar socially. The couple sold their house in Atherton this year and moved to Florida, said a relative.  Claire Cain Miller contributed reporting.  A version of this article appears in print on October 30, 2009, on Page B1 of the New York edition with the headline: Hints of Missed Chance to Pursue Galleon Case. Order Reprints| Today's Paper|Subscribe
Years before the current case erupted, authorities missed an opportunity to break up a nascent insider trading ring.