Rajaratnam receives longest prison term in history for insider trading
Hedge Fund founder Raj Rajaratnam sentenced in Manhattan federal court to 11 years in prison for insider trading crimes
Published on - October 13, 2011
Preet Bharara, the United States Attorney for the Southern District of New York, announced that Raj Rajaratnam was sentenced in Manhattan federal court to 11 years in prison stemming from his involvement in the largest hedge fund insider trading scheme in history. Rajaratnam was the managing member of Galleon Management, LLC (“Galleon”), the general partner of Galleon Management, L.P., and a portfolio manager for Galleon Technology Offshore, Ltd., and certain accounts of Galleon Diversified Fund, Ltd. He was convicted on May 11, 2011, of all 14 counts of conspiracy and securities fraud with which he was charged, following an eight-week jury trial. It is the longest sentence to be imposed for insider trading in history.
Manhattan U.S. Attorney Preet Bharara stated: “Two years ago, Raj Rajaratnam stood at the summit of Wall Street, commanding his own financial empire. Then he was arrested, tried and convicted by a jury. Rajaratnam stood convicted 14 times over of felonies, his empire exposed as a web of fraud and corruption that entangled many. Today, Rajaratnam stood once more and faced justice which was meted out to him.
From 2003 to March 2009, Rajaratnam repeatedly traded on material, non-public information (“Inside Information”) pertaining to upcoming earnings forecasts, mergers, acquisitions and other business combinations. As the evidence at trial showed, the inside information was given as tips by insiders and others at hedge funds, public companies and investor relation firms.
It is a sad conclusion to what once seemed to be a glittering story. We can only hope that this case will be the wake-up call we said it should be when Rajaratnam was arrested. Privileged professionals do not get a free pass to pursue profit through corrupt means. The message is the same for everyone no matter who you are or how much money you have—obey the law or face the fate of those who don’t.”