Thursday, October 13, 2011
Raj Rajaratnam, a Sri Lanka-born hedge fund tycoon convicted in the biggest Wall Street trading scandal in a generation, was ordered to serve 11 years in prison, the longest sentence 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. The Sri Lanka-born fund manager once stood atop a $7 billion New York hedge fund, but was found guilty of running a network of informants who supplied him with corporate secrets. The sentence was lighter than the 19-and-a-half year minimum term that prosecutors had sought, and was only slightly more than the 10 years handed down recently to a former Rajaratnam employee at the now-shuttered Galleon Group hedge fund. The judge, in rejecting calls for a tougher sentence, said Rajaratnam, 54, faces imminent kidney failure due to advanced diabetes. He referred to a report from the defence describing Rajaratnam's doctors as recommending dialysis soon. The report said that the doctors had begun the process for obtaining a kidney transplant. Rajaratnam was the key 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 & Co consultancy. Prosecutors have placed 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.