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Rajaratnam gets 11-year sentence
Raj Rajaratnam, a self-made hedge fund tycoon convicted in the biggest Wall Street trading scandal in a generation, was ordered on Thursday to serve 11 years in prison, one of the longest sentences ever in an insider-trading case but far less than prosecutors sought.
The sentencing caps a prosecution, marked by secret wiretaps of Rajaratnam and his associates that shocked the investment world.
Rajaratnam once ran a $7 billion hedge fund, but was found guilty of running a network of informants who provided him with corporate secrets.
The sentence was lighter than the 19-1/2 year minimum prison term that prosecutors had sought, but is still above the 10 years handed down recently in another major insider trading case.
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Rajaratnam gets 11-year sentence
US District Judge Richard Holwell said the 54-year-old Rajaratnam suffers from "advanced diabetes," which he said may lead to kidney failure and a possible kidney transplant, factors Holwell took into account in his sentencing decision.
The Galleon Group fund founder made no statement on his behalf before the sentence was pronounced. The judge also fined him $10 million and ordered him to forfeit $53.8 million.
The judge granted Rajaratnam's request to recommend that the hedge fund manager serve his term at the Butner, North Carolina, prison best known for housing Ponzi scheme operator Bernard Madoff, who is serving a life term.
Robert Moffat, a former International Business Machines Corp. executive, was sentenced to six months in prison for leaking tips to Rajaratnam co-defendant and New Castle Funds analyst Danielle Chiesi.
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Rajaratnam gets 11-year sentence
Rajaratnam was ordered to surrender on November 28. The judge rejected his request to remain under house arrest at his luxury Manhattan apartment while he pursues an appeal.
"The government is absolutely correct that insider trading is an assault on the free markets in a democratic society," the judge said.
Federal inmates typically must serve at least 85 per cent of their terms before being eligible for release.
Rajaratnam was convicted of 14 securities fraud and conspiracy charges in May after a two-month trial.
Prosecutors had made Rajaratnam the central figure of a sprawling criminal case, unveiled in October 2009, that touched some of America's top companies, including Goldman Sachs Group Inc, Intel Corp, IBM and the elite McKinsey and Co consultancy.
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Rajaratnam gets 11-year sentence
"There's no one who's Mr Rajaratnam's equal in terms of the length and breadth of his insider trading crimes," Assistant US Attorney Reed Brodsky told the court, urging for the maximum punishment.
Prosecutors called Rajaratnam the "modern face" of insider trading, putting him in a dubious pantheon of Wall Street power players such as takeover specialist Ivan Boesky and junk bond financier Michael Milken, principal figures in a mid-1980s insider-trading case. Both men served about two years in prison.
The Galleon case sent shock waves through Wall Street and the hedge fund industry, where traders can try to get an edge at all costs.
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Rajaratnam gets 11-year sentence
Prosecutors say Rajaratnam and others crossed the line by pumping corporate insiders for corporate earnings or details of mergers that had not yet been announced.
The investigation was marked by the most extensive use of secret FBI phone taps in a white-collar case.
Such tactics usually are reserved for Mafia and drug trafficking investigations.
The Galleon case has been a major victory for the US Attorney's Office in Manhattan.
Out of 26 people, including traders, lawyers, executives and consultants charged in the case, 25 have pleaded guilty or were convicted at trial of supplying or trading on illicit stock tips.