Rajaratman Sentenced to Eleven Years in Prison

Raj Rajaratman was sentenced to eleven years in federal prison on October 13, 2011.  Mr. Rajaratman, the former manager of the Galleon hedge fund, was convicted of fourteen counts of securities fraud and conspiracy earlier this year.  Prosecutors argued for a sentence of between nineteen and twenty-four years based on federal sentencing guidelines.

U.S. District Judge Richard J. Holwell distinguished Mr. Rajaratman’s convictions from those of other financial crimes.  He stated that “insider trading is insidious but poses a different threat than an Enron-type fraud or a Madoff-type Ponzi scheme.”  Judge Holwell also commented that Mr. Rajaratman had advanced diabetes, that his kidneys could fail, and that an eleven year sentence was a significant penalty.

While the sentence was less than the prosecutors had requested, it was the longest prison sentence imposed in any insider trading case according to a report by the New York Times.  The United States Attorney in Manhattan, Preet S. Bharara, has indicted fifty-two people on insider trading charges in the past two years and forty-nine of them pleaded guilty or were convicted at trial.

Other defendants have received longer sentences for other financial sector crimes.  Bernard L. Madoff was sentenced to one hundred fifty years for bilking investors in his historically devastating Ponzi scheme.  Adley H. Abdulwahab received a sixty year sentence for his involvement in defrauding retirees of approximately one hundred million dollars.  Lee B. Farkas, a former mortgage executive, was sentenced to thirty years in prison for bank fraud.

Mr. Rajaratman was represented by the law firm of Akin Gump Strauss Hauer & Feld LLP.