Raj Rajaratnam is "the modern face of illegal insider trading," said Assistant U.S. Atty. Reed Brodsky. The declaration was made in court Thursday at the historic sentencing of the hedge fund magnate, who was convicted in May on 14 counts of conspiracy and securities fraud.
The 11-year term was the longest sentence ever in an insider-trading case, according to prosecutors, who had sought 19 to 24 years.
But U.S. District Judge Richard J. Holwell explained the lesser sentence, revealing for the first time that Rajaratnam suffered from advanced diabetes and may need a kidney transplant. Holwell also cited Rajaratnam's charitable works.
The sentence, with two years of supervised release, is still part of a recent trend toward longer sentences for insider-trading offenses.
The decision in the case had been closely watched. The founder of the Galleon Group hedge funds was at the center of the recent crackdown on insider trading, the most intensive since the 1980s and the successful prosecutions of Ivan Boesky and Michael Milken.
Rajaratnam sat next to his lawyer during the proceedings and quietly said, "No, thank you," when asked by the judge if he wanted to speak.
Holwell rejected Rajaratnam's request to be released on bail, pending appeal, and ordered Rajaratnam to report to authorities within 45 days. He also ordered Rajaratnam to pay a $10-million fine.
The judge agreed to recommend that Rajaratnam be put in the medical facilities at Butner Federal Correction Complex in North Carolina, the same prison that houses Bernard Madoff and the former top executives at Adelphia Communications.
Several of Rajaratnam's former employees and colleagues already have been sent to prison in related cases.
The extensive insider-trading probe has charged 49 people since 2009. Among them, Danielle Chiesi, a former beauty queen who received a 30-month prison sentence in July for funneling insider tips to Rajaratnam.
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Photo: Raj Rajaratnam, co-founder of Galleon Group LLC, enters federal court in New York on Thursday. Credit: Peter Foley / Bloomberg
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