US Attorney Recommends 24 Years for Rajaratnam

The U.S. Attorney for the Southern District of New York recommended on August 9, 2011 that Raj Rajaratnam be sentenced to as much as twenty four and a half years in prison, the maximum period established in the nonbinding sentencing guidelines for the crimes for which Rajaratnam was convicted.  According to an article in the New York Times, the government submitted its presentencing memorandum to U.S. District Judge Richard J. Howell, asserting that “[s]uch a sentence is necessary to punish Mr. Rajaratnam for his extensive criminal activities, and to send a clear and unambiguous message to hedge funds and money managers that insider trading will not be tolerated.”

Mr. Rajaratnam was the founder of Galleon Management, a hedge fund that at one time was managing more than $5 Billion in assets. He was convicted on May 11, 2011, after a two month trial of fourteen counts of insider trading and conspiracy.  His sentencing is scheduled for September 27.

The article in the New York Times stated that the defense also filed a presentence memorandum with Judge Howell in which they argued for a sentence “substantially below” the recommended guidelines.  The memorandum stated that Mr. Rajaratnam was “already keenly aware that the consequences of insider trading can include the destruction of one’s business and reputation, exposure to scorn and public obloquy and the complete loss of personal dignity and privacy to government surveillance and the media’s microscope.”  The defense argued that a lengthy sentence would “seriously threaten his well-being” and, effectively, would be “a death sentence.”

Mr. Rajaratnam’s trial was noted for the government’s extensive use of wiretaps.  In spite of challenges to the use and admissibility of the surveillance tapes, Judge Howell permitted their use.  See United States v. Rajaratnam, 2010 WL 4867402 (S.D.N.Y. November 24, 2010).  It is expected that the Second Circuit Court of Appeals will review Judge Howell’s opinion and make its own determination as to the propriety of the government’s conduct in obtaining, and executing, the wiretap order.