Rajaratnam's Bid To Shorten Insider Trading Sentence Rejected By Judge

Mar 3 2017 | 11:09pm ET

A federal judge rejected Galleon Group founder Raj Rajaratnam's attempt to shorten his 11-year prison sentence on Friday, saying the former hedge fund manager had failed to prove his claims on several counts.

U.S. District Judge Loretta Preska in Manhattan said Rajaratnam did not adequately prove his innocence on five of the 14 counts he challenged, nor was he able to prove two other counts should be tossed because a key witness for the government committed perjury, according to a Reuters article.

The judge also rejected Rajaratnam’s assertions that his trial counsel was ineffective and that the $53.8 million he agreed to forfeit should be reduced to $4.3 million.

Rajaratnam was convicted of 14 counts in May 2011 - nine for securities fraud counts and five for conspiracy charges – stemming from an insider trading crackdown following the financial crisis. He was one of the best-known managers convicted as part of the probes, initiated by Manhattan U.S. Attorney Preet Bharara, that ultimately netted some 80 convictions and guilty pleas.

In his argument, Rajaratnam said he did not provide benefits to insiders passing him confidential information regarding the trades at issue in five of the nine counts, a key element for insider trading following the December 2014 Newman decision that significantly raised the bar for convictions.

However, a U.S. Supreme Court decision late last year ruled on the quid-pro-quo aspect of insider trading, noting in a separate case that gifts of confidential information can still be violations of securities laws even if tangible benefits were not provided in return.

Rajaratnam has served more than five years of his sentence in prison and will be eligible for release in July 2021, the article said. 

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