Key Insider-Trading Source Khan Faces Sentencing

Jan 29 2013 | 10:01am ET

Roomy Khan has been a vital source of information in the current crackdown on insider-trading, contributing leads that have helped prosecutors charge more than 70 people. But she may not get the same kind of leniency on Thursday that other cooperating witnesses have received when she is sentenced.

While Khan's information has helped nab the likes of Galleon Group founder Raj Rajaratnam, for whom she formerly worked, her credibility has always been an issue. It kept her off the stand in his trial, which resulted in his conviction. And the one time she did take the stand, against former hedge fund manager Doug Whitman, Whitman's defense savaged her as a liar, brining her to tears. Whitman was convicted anyway.

"Despite the benefits derived from Khan's cooperation, however, Khan also engaged in a course of conduct that threatened to undermine her cooperation and her value as a cooperating witness," prosecutor Christopher LaVigne wrote in a court filing.

Khan has pleaded guilty to insider-trading twice. But during more than five years of cooperation with the Federal Bureau of Investigation, she has lied about both her own actions and those of the people she has fingered. She also perjured herself during a lawsuit brought by her former housekeeper. Her cooperation is ongoing.

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