On Thursday, hedge fund billionaire Raj Rajaratnam was sentenced to 11 years in prison for insider trading. Mr. Rajaratnam was formerly in charge of the Galleon Group hedge fund.
Mr. Rajaratnam had used tips from executives at Intel, I.B.M. and McKinsey & Company to his advantage, making $70 million. As part of his sentence, the billionaire was fined $10 million; he will return another $53.8 million.
This sentencing comes after a jury found Mr. Rajaratnam guilty of securities fraud and conspiracy in May. The convicted hedge funder did not testify at his trial and did not speak at his sentencing.
Aside from being sentenced to the longest prison term ever for insider trading, Mr. Rajaratnam’s case is also distinctive because it exemplifies the government’s recent, harsher stance on insider trading and corporate crime. It was the first time that the government used wiretaps on hedge funders to sniff out wrongdoing. Plus, the government had advocated for an even more severe punishment of 19 to 24 years in prison.
The severity of this suggested sentence is especially interesting because insider-trading crimes (unlike other forms of corporate crime, like Ponzi schemes) do not have identifiable individual victims and so are often viewed more leniently by judges.
To learn more about the specifics of Mr. Rajaratnam as well as the recent history of corporate crime and insider trading, read this.
Image Credit: Dealbreaker.com