Rajaratnam Sentenced to 11 Years Imprisonment for Insider Trading

October 15 00:00 2011

New York, October 15 (RainbowNewsLine.com) – US District Judge Richard Holwell has sentenced Raj Rajaratnam, co-founder of the Galleon Group LLC, to 11 years imprisonment for insider trading. The prosecution had asked for a stiffer sentence of 19 to 24 years for the hedge fund magnate but the defense pleaded for a lighter sentence in view of his ill-health and the substantial amount of charitable work that he had done.

Insider trading takes place when people in power having access to insider information that is not available to ordinary citizens, use that information to amass wealth. The prosecutors of Rajaratnam’s case argued that he made $72 million by using illegal tips to trade in stocks of many companies including reputed ones like Google, Intel and Goldman Sachs.

Rajaratnam, 54, is of Sri Lankan origin and has an MBA from the University of Pennsylvania’s Wharton Scholl of Business. He was accused of using privileged information that he had access to in making investments. As such, he gained an unfair advantage over others who did not have such information.

The other ways in which a person can indulge in insider trading include insights into strategic plans of corporations, information on likely movements, both in and out of key personnel and changes in legislation on the anvil that could have a major bearing on the corporation’s business.