Insider trading scam: US prosecutors seek maximum prison term for Rajaratnam

Seeking maximum prison term for Raj Rajaratnam, the hedge fund manager convicted of running America’s biggest insider trading scam, US prosecutors have recommended that he should be sentenced to as many as 24 and a half years for his “extensive criminal activities’’.

Federal prosecutors had yesterday filed a 56-page ‘Government’s Sentencing Memorandum’ recommending a “very substantial term of imprisonment proportionate to the historic nature of his crime’’.

Separately, the defence submitted its own 79-page memo asking for a lenient prison term “substantially below” the recommended guidelines saying a lengthy prison term would “seriously threaten his well-being” and would be “a death sentence.”

The defence memo also referred to Mr Rajaratnam’s health problems, describing them as “a unique constellation of ailments ravaging his body’’.

Federal prosecutors termed Sri Lanka-born Rajaratnam, 54, as the “modern face of illegal insider trading” saying “he is arguably the most egregious violator of the laws against insider trading ever to be caught’’.

Their memo said the court should impose the maximum sentence of 235 to 293 months established for his crime under non-binding sentencing guidelines, a ruling that will “deter others in the hedge fund and money management world from engaging in a crime that is far too rampant’’.

The memo was submitted to Judge Mr Richard Holwell, who is scheduled to sentence Mr Rajaratnam on September 27.

Mr Rajaratnam’s lawyers argue that he should get a lenient sentence because he was “already keenly aware that the consequences of insider trading can include the destruction of one’s business and reputation, exposure to scorn and public obloquy and the complete loss of personal dignity and privacy to government surveillance and the media’s microscope’’.

However, the Government countered saying Mr Rajaratnam reaped at least $64 million in illegal profits from insider trading.

Prosecutors said the sentence was appropriate because Mr Rajaratnam’s “criminal conduct was brazen, arrogant, harmful and pervasive’’.

“Such a sentence is necessary to punish Rajaratnam for his extensive criminal activities, and to send a clear and unambiguous message to hedge funds and money managers that insider trading will not be tolerated,” said Mr Jonathan Streeter, an assistant United States attorney, in the memo.

Mr Rajaratnam’s lawyers, on their part, said their client had been portrayed “as the poster child for every wrongful act that has ever been associated with Wall Street’’.

“Rajaratnam understands that he has been convicted of serious offenses. But the evidence at trial showed that Rajaratnam was not the ‘mastermind’ of an insider—trading network, as the government and the press have painted him,” Mr Rajaratnam’s lawyer Mr John Dowd said.

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