UK Regs Expert Welcomes Rajaratnam Verdict

Oct 14 2011 | 10:00am ET

A UK regulatory compliance expert thinks convicted insider-trader Raj Rajaratnam got his just deserts when a U.S. court handed down an 11-year prison sentence on Thursday.

“The 11-year sentence for a man described as ‘the modern face of illegal insider trading’ will be welcomed by all stakeholders in the integrity of capital markets. This was not a technical offence but deliberate conduct calculated to profit from illicitly obtained company information not yet known by the market. Essentially, Rajaratnam was securing a higher exam mark than he deserved by having caught sight of some of the answers before sitting the test,” said Peter Moore, head of regulation at UK compliance consultancy The IMS Group, in a statement released Friday.

Moore believes the case is worthy of note in the UK for a number of reasons. For one, the 11-year sentence exceeds the current maximum insider-trading sentence possible in the UK by four years. Moore says the FSA’s interim managing director and former head of enforcement, Margaret Cole, has publicly requested that the maximum be raised to 10 years.

Moore also notes that while the Rajaratnam case turned on wiretap evidence, which “may not actually be admissible in a UK court,” the UK regulator had had access to mandatory voice records of traders’ calls (which must be retained for six months) since March 2009. Those rules will be extended to mobile phones next month. Moreover, the FSA’s recently enhanced trade surveillance system, ZEN, enables the FSA to detect suspicious trades which may result in the FSA contacting firms requesting that they preserve voice records beyond the six month timeframe.

The use of wiretaps to build the case against Rajaratnam is expected to be at the heart of his lawyers’ appeal of the sentence.


In Depth

Q&A: Decathlon Capital On Revenue-Based Alternative Lending

Oct 30 2017 | 3:49pm ET

The explosion in private credit activity since the end of the financial crisis is...

Lifestyle

CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Saxby: Not All EBITDA Is Created Equal

Nov 30 2017 | 8:02pm ET

Record levels of dry powder are driving competition among private equity firms to...