Galleon Group LLC co-founder, Raj Rajaratnam must pay a $92.8 million penalty, a record, in a case brought on by the SEC, according to a judge. The 54 year old was sentenced to 11 years in prison, the longest for insider trading in U.S. history.
Rajaratnam believes he should be free of additional civil penalties in the case, claiming that he has already experienced enough suffering after the order from U.S. District Judge Richard Holwell to pay a $10 million fine and forfeit close to $54 million in addition to his prison term.
U.S. District Judge Jed Rakoff sided with the SEC Monday in New York, issuing an order for a judgement without trial. Rakoff said he reviewed the pre-sentencing report prior to his decision, at the request of Rajaratnam’s lawyer. According to Rakoff, Rajaratnam has a net worth that “considerably exceeds the financial penalties imposed in the criminal case.”
“When to this is added the huge and brazen nature of Rajaratnam’s insider trading scheme, which, even by his own estimate, netted tens of millions of dollars and continued for years, this case cries out for the kind of civil penalty that will deprive this defendant of a material part of his fortune,” Rakoff said in his order.
An SEC lawyer stated yesterday that the agency hopes to question “one or both” of Rajaratnam’s brothers under oath for the lawsuit against Rajat Gupta. Gupta is the former Goldman Sachs Group, Inc. director who was accused of tipping off Rajaratnam.