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Galleon Group founder Raj Rajaratnam exits Manhattan Federal Court after a sentencing hearing on Thursday.
By Patrick Rizzo
A former hedge fund tycoon who was one of America's richest men was sentenced Thursday to 11 years in prison for running a massive insider trading scam. It was?the longest sentence ever for an insider trading conviction, but much lower than the?24 years?maximum he could have received under federal guidelines.
Sri Lankan-born Raj Rajaratnam, 54, was also fined $10 million, according to CNBC.
Lawyers for?Rajaratnam,?the founder of Galleon Group hedge fund, had?been arguing?for a lighter sentence, saying that more than two decades in prison?was outsized for the crime?and that Rajaratnam was in poor health.
The sentencing may still raise the bar for future insider trading cases, however;?the lengthiest previous sentence was around a decade, according to the Financial Times.
"Rightly or wrongly, there is no doubt that sentences for insider trading cases for years to come will be judged against this benchmark. What we saw in this sentence was an effort by the judge to balance the individual culpability of Mr. Rajaratnam with the symbolic significance of this sentence," said?former Assistant U.S. Attorney for New Jersey Robert Mintz, in a statement emailed by the?law firm?McCarter & English, where he is a?partner.??
Rajaratnam was convicted in May of conspiracy and fraud for persuading a crew of corporate insiders into providing him with illegal?tips on technology stocks such as Sun Microsystems, IBM and?Advanced Micro Devices, among other companies. The tips yielded him about?$70 million to $75 million in profits and the avoidance of losses, prosecutors had charged.
The Associated Press reported that federal district Judge Richard Holwell, who?pronounced sentence,?concluded?Rajaratnam's profits amounted?to?well over $50 million.?
"His crimes and the scope of his crimes reflect a virus in our business culture that needs to be eradicated,"?said Holwell, who took?Rajaratnam's?kidney disease and his diabetes into account when sentencing, according to the AP.
Rajaratnam was ordered to turn himself in on Nov. 28. Reuters reported?Rajaratnam will serve his sentence at?the same federal prison in Butner, N.C., that houses?Bernie Madoff, who got?a 150-year term?for his role in the largest Ponzi scheme ever.
Prosecutors called?the Rajaratnam?investigation the biggest insider trading case ever. They?used a variety of methods to gather an avalanche of evidence against Rajaratnam, including wiretapping, which is more commonly used?for?drug crimes or?organized crime cases. Those wiretaps form the basis of Rajaratnam's appeal.
The trial raised questions about where to draw the line?between legitimate research and insider trading. Raj's defense attorneys had argued that their client was only doing what happens every day on Wall Street, where stock analysts?gather information and ask hard questions of companies about their businesses.
Rajaratnam's sentencing was the latest chapter in a sweeping?insider trading probe that since 2009 has charged 49 people,?almost all of whom have been convicted. Among them was former beauty queen Danielle Chiesi, who was sentenced in July to 30 months in prison, less than prosecutors had requested, for funnelling insider tips to Rajaratnam.???
Hedge fund tycoon Raj Rajaratnam has been sentenced to serve 11 years in prison for insider trading. CNBC's Scott Cohn reports.
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