Wall Street: Record sentence for insider trading
“A virus in our business culture that needs to be eradicated.” That’s what a New York federal judge called insider trading last week as he sentenced billionaire Raj Rajaratnam to 11 years in prison, the longest term ever imposed in an insider trading case, said Susan Pulliam and Chad Bray in The Wall Street Journal. Rajaratnam, 54, the former head of hedge fund Galleon Group, was convicted in May of securities fraud and conspiracy in a probe that has resulted in more than two dozen convictions; prosecutors said Rajaratnam made more than $70 million through illegal tips from corporate insiders and corrupt traders. He was also hit with a $10 million fine and ordered to forfeit nearly $54 million.
The prison sentence doesn’t have the “symbolic heft” of the 19 to 24 years prosecutors requested, said Peter Lattman in The New York Times. But it “continues a trend of ever-stiffer penalties against white-collar criminals.” And Wall Street seems to have taken notice of the tough punishment and the government’s use of “hardball tactics” like wiretapping to bring down a major hedge fund manager. “These heavy sentences do send a powerful message,” said former federal prosecutor Jonathan B. New.
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