US hedge fund executive Raj Rajaratnam sentenced to 11 years
Friday 14 October 2011
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.
- 1 Cyclist who knocked down three-year-old girl says his life has been 'destroyed'
- 2 Chelsea victory parade: Chelsea mocked on Twitter as 'tens of fans' pack the streets of London
- 3 US warned by Chinese media to stop meddling or 'war will be inevitable'
- 4 Woman, 21, dies after taking contraceptive pill that 'caused fatal blood clot'
- 5 Isis burns woman alive for refusing to engage in 'extreme' sex act, UN says
Cyclist who knocked down three-year-old girl says his life has been 'destroyed'
US warned by Chinese media to stop meddling or 'war will be inevitable'
How China's richest man Li Hejun lost $15bn in an hour - and made a fortune
Isis burns woman alive for refusing to engage in 'extreme' sex act, UN says
Snoop Dogg on why he doesn't regret displaying misogyny towards women
As a white man, I'm surprised more women aren't tweeting the hashtag #KillAllWhiteMen
Scotland may have to leave the EU even if it votes to stay in, David Cameron confirms
The day that Britain resigned as a global power
SNP fury as HS2 finds 'no business case' for taking fast train service to Scotland
A nation of inequality: How the UK is failing to feed its most vulnerable people
EU referendum: David Cameron to deny EU migrants and under-18s the chance to vote
£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...
£35 - 40k + Benefits: Guru Careers: We are seeking a Software Developer (JavaS...
£18000 - £23000 per annum + Commission: SThree: As a Trainee Recruitment Consu...