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An Indian-origin former analyst, accused of providing confidential company information in the Raj Rajaratnam-led insider trading scam in the US, has been fined $34 million for his role in the case.
Mr Deep Shah, who was with credit ratings agency Moody’s, fled the US and is currently believed to be in India.
He has failed to “appear, answer or otherwise defend the Securities and Exchange Commission’s action,” the Commission said today.
Judge Mr Jed Rakoff in the US District Court for the Southern District of New York ordered that Mr Shah was liable to pay a $24.6-million fine and $9.9 million in restitution plus interest.
The SEC had filed its action against Mr Shah on October 16, 2009, which alleged that hedge fund company Galleon, its chief Mr Raj Rajaratnam, and Mr Deep Shah engaged in a widespread insider trading scheme involving hedge funds, industry professionals and corporate insiders.
A resident of New Jersey at the time, Mr Shah was employed at Moody’s as a lodging industry analyst.
SEC alleged that Mr Shah violated federal securities laws by tipping an individual investor Mr Roomy Khan about material and non-public information related to the July 2007 acquisition of Hilton Hotels by the Blackstone Group and the March 2007 acquisition of Kronos by Hellman & Friedman.
Mr Khan traded on the basis of this information and also tipped others. He and others paid Mr Shah cash for the inside information he gave them.
Mr Shah left Moody’s in late 2007 or early 2008 and fled the country to avoid facing the insider trading charges.
Mr Khan pleaded guilty in 2009 to criminal conspiracy and securities fraud charges and has been cooperating with the government’s investigation.
Mr Rajaratnam was convicted in May of insider trading and conspiracy.
Prosecutors have recommended a maximum term of 24 and a half years when he is sentenced next month.
The probe into the Galleon insider trading case, one of the largest in the country’s history, has lead to more than two dozen arrests and 21 guilty pleas.
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