NY fund boss to pay $1.45M to settle SEC suit
NEW YORK (AP) - A hedge fund founder serving the longest prison term ever given for insider trading also will be writing the government another big check.
Raj Rajaratnam, a one-time billionaire convicted last year of trading on inside information, will pay nearly $1.45 million to settle a civil case brought by the Securities and Exchange Commission, court documents show. A federal judge on Thursday approved the deal, which requires Rajaratnam to pay the settlement within 90 days and waive any right to appeal it.
The documents say the settlement includes $1.29 million representing "profits gained and losses avoided" as a result of trading on tips from a former Goldman Sachs Group Inc. director convicted separately in June. The settlement also includes $148,000 in prejudgment interest.
The Sri Lanka-born Rajaratnam, who founded the New York-based Galleon Group of hedge funds, previously was ordered to pay a record $92.8 million civil penalty to the SEC.
In the criminal case against him, he was fined $10 million and was ordered to forfeit $53.8 million in what U.S. District Court Judge Jed Rakoff said last year were illicit profits from trading on confidential corporate information.
Prosecutors said Rajaratnam earned as much as $75 million in illegal profits in a case that resulted in more than two dozen convictions. They said he acted on secrets he got from friends and colleagues in the securities industry and at public companies.
Rajaratnam was convicted thanks largely to wiretaps prosecutors used to back up their claim that he made a fortune by coaxing a crew of corporate tipsters into giving him an illegal edge on blockbuster trades in technology and other stocks. His defense argued that the tapes revealed nothing more than that he was doing his duty by asking questions about information already circulating in the "real world" of high finance.
Rajaratnam, 55, is serving 11 years at a Massachusetts federal prison and has appealed.
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