Prosecutors alleged billionaire Rajaratnam gained about $64 Million through insider trading, just a fraction of what his hedge fund, Galleon Group, was valued at in its peak. Yet the move brought the Sri Lankan born manager 11 years in prison, the longest prison sentence on record for insider trading.
The fallen hedge fund billionaire Raj Rajaratnam received the prison sentence on Thursday in what the government called the “largest hedge fund insider trading case ever charged”.
The government spent two years going after Rajaratnam. The former head of the Galleon Group hedge fund was also fined $10 million. Earlier this year, Rajaratnam went through a two month trial, during which prosecutors revealed wire taps in which Rajaratnam exchanged inside information about companies like Goldman Sachs and Google with other insiders and traders. At the conclusion of the trial a jury convicted him of securities fraud and conspiracy.
Nifty Interactive Behind Rajaratnam Sentencing
Prosecutors said Rajaratnam was “the modern face of illegal insider trading”. Prosecutors singled out several corrupt while collars they say were part of Rajaratnam’s network, including former executives of Intel, I.B.M. and the consulting firm McKinsey & Company.
Though an 11 year sentence is a record, it’s much lower than the 19-24 years prosecutors sought. Judge Holwell said Mr. Rajaratnam’s charitable works and his medical problems helped lower the sentence.
John C. Dowd, Mr. Rajaratnam’s lawyer, had argued the government’s request of a longer prison sentence to be “grotesquely severe” and more in line with sentences for violent crimes.