Bloomberg news
written by Carla Main
Thursday October 13, 2011
Raj Rajaratnam, the Galleon Group LLC co-founder whom prosecutors called “the modern face of illegal insider trading,” was sentenced to 11 years in prison, one of the longest terms ever for insider trading, though less than half of the maximum sought by the government.
Rajaratnam, 54, is the central figure in what U.S. investigators called the largest hedge fund insider trader case in U.S. history. The probe, which leveraged the widespread use of FBI wiretaps for the first time in such an inquiry, led to convictions of more than two dozen people. Prosecutors said he made more than $72 million by using illegal tips to trade in stocks of companies including Goldman Sachs Group Inc., Intel Corp. (INTC), Google Inc. (GOOG), ATI Technologies Inc. and Clearwire Corp. (CLWR)
U.S. District Judge Richard Holwell sentenced Rajaratnam yesterday before a packed courtroom in lower Manhattan, saying his term was enhanced because of his leadership role in the scheme and obstruction of a related Securities and Exchange Commission probe. Holwell also noted that he received more than 200 letters on the fund manager’s behalf, and that Rajaratnam, who declined to speak, suffers from diabetes and needs a kidney transplant.
Holwell denied Rajaratnam’s request to remain free on bail while he appeals his conviction, and told him to report to the medical center at the federal correctional complex in Butner, North Carolina, in 45 days.
The Galleon case helped trigger two other overlapping insider-trading investigations that relied heavily on wiretaps, a tool more commonly used to probe organized crime. A federal jury in Manhattan convicted Rajaratnam on May 11 of all 14 counts of securities fraud and conspiracy against him following a two-month trial.
The case is U.S. v. Rajaratnam, 09-01184, U.S. District Court, Southern District of New York (Manhattan).
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