US hedge fund executive Raj Rajaratnam sentenced to 11 years

The 11-year prison sentence for a wealthy hedge fund founder convicted of insider trading charges set a record for its length, but still left the government well short of the two-decade-long prison sentence it had sought to send a stern message to Wall Street.

Raj Rajaratnam, 54, left the federal court in Manhattan yesterday after US District Judge Richard Holwell announced a sentence that was four years below a Probation Department recommendation and well short of the government's request that the Galleon Group founder serve as much as 24 and a half years.

Holwell credited Rajaratnam for acts of charity and cited his diabetes and need for a kidney transplant as reasons for leniency.

"Given the role Mr Rajaratnam played in this scheme, many people could criticise the sentence as being too lenient," said Robert Mintz, a former federal prosecutor who heads the white collar defence group at the firm McCarter & English.

"In this environment where there's a palpable public antipathy to Wall Street, many people expected a sentence that was going to be closer to what prosecutors were seeking than what the defence was asking for," he added.

Assistant US Attorney Reed Brodsky told Holwell that Rajaratnam made up to $75 million between 2003 and 2009 at his Galleon Group of funds by working a network of friends, former classmates and other tipsters at various companies and investment firms to get lucrative secrets about public companies including Google, IBM, Hilton Hotels and Goldman Sachs before they were announced publicly.

He said insider trading — carried out by smart, educated people — had "become rampant" because the incentives to commit it were higher than ever before and detecting it was extremely difficult. Too often, Brodsky said, those in the securities industry rationalise that they are justified to use inside information.

"They know they are committing crimes, but it's OK because they need to beat the competition, it's OK because they need to achieve the best, it's OK because is it really so bad? That was Mr Rajaratnam's attitude," Brodsky said.

"Today you sentence a man who is the modern face of illegal insider trading," Brodsky told the judge. "He is arguably the most egregious insider trader to face sentencing in a courthouse in the United States."

Holwell agreed with the need for deterrence, saying Rajaratnam's "crimes and the scope of his crimes reflect a virus in our business culture that needs to be eradicated." He also agreed that federal sentencing guidelines recommended that Rajaratnam serve nearly 20 years in prison.

For his part, Rajaratnam remained silent, declining to speak when the sentencing proceeding reached the point when defendants normally address the judge.

Holwell imposed a $10 million fine and ordered forfeiture of $53.8 million, representing illicit profits, for a man who in 2009 was ranked Number 559 by Forbes magazine among the world's wealthiest billionaires, with a $1.3 billion net worth.

He was returned after the proceeding to his $10 million Manhattan condominium, where he will continue to undergo electronic monitoring under a $100 million bail package until he reports to prison on 29 November. His lawyers asked that the Sri Lanka-born Rajaratnam be sent to the medical facility at the federal prison in North Carolina where Bernard Madoff is serving his 150-year sentence.

Since his October 2009 arrest, more than two dozen people were arrested in the investigation, nicknamed Perfect Hedge, and all were convicted.


Start your day with The Independent, sign up for daily news emails
Life and Style
Steve Shaw shows Kate how to get wet behind the ears and how to align her neck
healthSteven Shaw - the 'Buddha of Breaststroke' - applies Alexander Technique to the watery sport
Arts and Entertainment
The sight of a bucking bronco in the shape of a pink penis was too much for Hollywood actor and gay rights supporter Martin Sheen, prompting him to boycott a scene in the TV series Grace and Frankie
footballShirt then goes on sale on Gumtree
Terry Sue-Patt as Benny in the BBC children’s soap ‘Grange Hill’
voicesGrace Dent on Grange Hill and Terry Sue-Patt
Have you tried new the Independent Digital Edition apps?
ebookA unique anthology of reporting and analysis of a crucial period of history
Arts and Entertainment
Performers drink tea at the Glastonbury festival in 2010
Arts and Entertainment
Twin Peaks stars Joan Chen, Michael Ontkean, Kyle Maclachlan and Piper Laurie
tvName confirmed for third series
Cameron Jerome
footballCanaries beat Boro to gain promotion to the Premier League
Arts and Entertainment
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Guru Careers: Software Developer

£35 - 40k + Benefits: Guru Careers: We are seeking a Software Developer (JavaS...

SThree: Trainee Recruitment Consultant / Resourcer

£18000 - £23000 per annum + Commission: SThree: As a Trainee Recruitment Consu...

Ashdown Group: UI Developer - (UI, HTML, CSS, JavaScript, AngularJS)

£25000 - £40000 per annum: Ashdown Group: UI Developer - (UI, JavaScript, HTML...

Day In a Page

Abuse - and the hell that came afterwards

Abuse - and the hell that follows

James Rhodes on the extraordinary legal battle to publish his memoir
Why we need a 'tranquility map' of England, according to campaigners

It's oh so quiet!

The case for a 'tranquility map' of England
'Timeless fashion': It may be a paradox, but the industry loves it

'Timeless fashion'

It may be a paradox, but the industry loves it
If the West needs a bridge to the 'moderates' inside Isis, maybe we could have done with Osama bin Laden staying alive after all

Could have done with Osama bin Laden staying alive?

Robert Fisk on the Fountainheads of World Evil in 2011 - and 2015
New exhibition celebrates the evolution of swimwear

Evolution of swimwear

From bathing dresses in the twenties to modern bikinis
Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine