Thursday, 31 July 2014
Last updated 9 hours ago
Sep 12 2011 | 1:31pm ET
Prosecutors amplified their effort to have Galleon Group founder Raj Rajaratnam sent to prison for decades, saying the convicted insider-trader "remains defiant." But the former billionaire's legal team, in their own sentencing memorandum, decried prosecutors' proposed sentence as "grotesquely severe."
In their memo, prosecutors cited an interview conducted by a court probation officer with Rajaratnam after his conviction. Those remarks show Rajaratnam's "serious disregard for the law" and fully justify the 19½-to-24½ years in prison they are seeking.
"In my own mind, the line between permissible 'detective work' and impermissible insider trading was not always clear, especially with regard to companies broadly covered by the news media as to which there was a wealth of publicly-available information, including frequent leaks, rumors and speculation about corporate transactions and other important developments," Rajaratnam told the probation officer.
"I am not aware of anyone who lost money as a result of my actions presented to the jury," he continued. "The trades at issue were made in liquid stocks with market makers. They were not made with individual investors who would have refrained from trading but for my purchases and sales." Rajaratnam added, "all of Galleon's investors were made whole after Galleon closed down."
Those comments show that Rajaratnam has "absolutely no appreciation" that he "cheated the system."
"The legal line was clear" on insider-trading prosecutors said, adding that Rajaratnam "cannot seriously claim confusion."
"Insider-trading is not a victimless crime," prosecutors wrote. "Rajaratnam betrayed Galleon's investors, its employees, the counterparties to its trades, and the capital markets system upon which he build his wealth and success."
For their part, Rajaratnam's legal team accused the government of asking U.S. District Judge Richard Holwell "to ignore Raj Rajaratnam the human being and to sentence a caricature instead." They noted that Rajaratnam's illegal trades made up only 1% of his total trading and that the sentence sought by prosecutors would exceed the average sentence for violent crimes.
"This court's role is not to validate a prosecutorial public relations effort, nor is it to single out one man to serve as the whipping boy for Wall Street misdeeds," they wrote.
Rajaratnam's lawyers again claimed that a decades-long sentence would "guarantee Mr. Rajaratnam's death in prison."
Prosecutors took issue with that claim, noting that the defense has never specified what the "unique constellation of ailments ravaging his body" are. Rajaratnam is 54.
"Rajaratnam provided no information regarding his medical condition in any public filing," prosecutors wrote. "The government respectively submits that the bases for a downward departure [from federal sentencing guidelines] must be disclosed publicly."
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…