Raj Rajaratnam, the disgraced founder of the Galleon Group hedge fund, was to be sentenced to prison Thursday after his conviction in the biggest US insider trading case for years.
Federal Judge Richard Holwell in New York could impose a sentence of up to 24 years. The decision was being closely watched as a signal of the government’s intent to crack down on Wall Street corruption.
Sri Lanka-born Rajaratnam, 54, was convicted in May on 14 counts of conspiracy and securities fraud related to his use of illegal insider tips for an edge on multi-million dollar stock market trades.
The trial grabbed attention because it exposed deeply hidden corruption on Wall Street and because prosecutors took the unusual step of using telephone wiretaps to gather evidence for a white-collar probe.
According to prosecutors, the founder of Galleon netted about $72 million on the basis of illegal tips, which included deals on shares in Goldman Sachs, Intel Corp, and Google Inc.
In final pre-sentencing arguments, prosecutors demanded Rajaratnam be sentenced to as much as 293 months, or around 24 and a half years, in prison, and a minimum of 19 and a half years.
They told Holwell that Rajaratnam should be punished for personal gains and also for the money that his illegal trades earned Galleon.
Prosecutor Reed Brodsky argued that Rajaratnam further aggravated his crime by acting as leader of a wider conspiracy.
Defense lawyers made a last stand to save their client from spending what could be the rest of his life behind bars.
They are asking for clemency over health issues that have not yet been made public, as well as arguing that insider trading is mostly a victimless crime, since Rajaratnam did not cause others to lose money.
In addition, they dispute government allegations that Rajaratnam led any sort of network.
Gains directly attributable to Rajaratnam were less than $8 million and his sentence should be as low as six and a half years, the defense says.
Jacob Frenkel, a lawyer specializing in white-collar crime and securities enforcement, told AFP that the high-profile chief federal prosecutor in New York, US Attorney Preet Bharara, had gained in stature with the case.
"This is a flagship conviction and sentence for sending a strong deterrent message," Frenkel said.
As well as handing down a sentence, Holwell must decide whether or not to remand Rajaratnam immediately or allow him to remain free a short while longer before starting his sentence.
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