But it was also substantially less than what the prosecution had sought against the man it called “a billion-dollar force of deception and corruption on Wall Street.”
The 54-year-old Rajaratnam, who headed Galleon Management, was convicted in May on 14 counts of conspiracy and securities fraud for illegally using inside information to trade in stocks such as Goldman Sachs, Google, Hilton and Intel. The trading generated profits or avoided losses of $72 million, the government estimated.
The case pulled back the curtain on illicit trafficking in corporate secrets that involved people at the highest echelons of the financial world and gave hedge funds a competitive edge. The 11-year sentence reflects a trend toward tougher treatment of insider-trading convicts, said former federal prosecutor Robert W. Ray.
Less than a decade ago, it would have been unusual for a defendant in a major insider trading case to get more than two years, Ray said.
Rajaratnam’s crimes “reflect a virus in our business culture that needs to be eradicated,” U.S. District Judge Richard J. Holwell said at the sentencing in New York.
“It is a sad conclusion to what once seemed to be a glittering story,” Manhattan U.S. Attorney Preet Bharara said in a news release.
Bharara said he hoped the case served as a wake-up call.
“Privileged professionals do not get a free pass to pursue profit through corrupt means,” he said.
Rajaratnam was ordered to forfeit $53.4 million and pay a fine of $10 million. Out on $100 million bail, he is scheduled to report for prison on Nov. 28.
The Justice Department opposed allowing Rajaratnam to stay out of prison while he appeals, saying he might flee to his native Sri Lanka or some other country.He “would have access to tens of millions of dollars by the mere touch of a keystroke,” the government said in a court filing.
Rajaratnam will appeal his conviction, Kathryn Holmes Johnson, a spokeswoman for his legal team, said by e-mail.
The Associated Press reported from New York that defense lawyers asked that Rajaratnam be allowed to go to the medical facility at the Butner Federal Correctional Complex in North Carolina, where Bernard Madoff is serving his 150-year sentence for running a Ponzi scheme that cheated thousands of people out of billions of dollars.
Though Rajaratnam did not testify at his trial, the prosecution made extensive use of wiretaps of his conversations with associates.
According to the government, Rajaratnam gathered inside information about pending corporate deals and earnings announcements from an array of tipsters, including a Goldman Sachs board member, a senior partner at the consulting firm McKinsey & Co. and an insider at the Moody’s credit rating agency.