NEW YORK, (Reuters) – Raj Rajaratnam, a self-made hedge fund tycoon convicted in the biggest Wall Street trading scandal in a generation, was ordered to serve 11 years in prison, the longest sentence ever in an insider-trading case but far less than prosecutors sought.
Yesterday’s sentencing caps a prosecution, marked by secret wiretaps of Rajaratnam and his associates, that shocked the investment world. The Sri Lanka-born fund manager once stood atop a $7 billion New York hedge fund, but was found guilty of running a network of informants who supplied him with corporate secrets.
The sentence was lighter than the 19-1/2 year minimum term that prosecutors had sought, and was only slightly more than the 10 years handed down recently to a former Rajaratnam employee at the now-shuttered Galleon Group hedge fund.
The judge, in rejecting calls for a tougher sentence, said Rajaratnam, 54, faces “imminent kidney failure” due to advanced diabetes. He referred to a report from the defense describing Rajaratnam’s doctors as recommending dialysis soon. The report said the doctors had begun the process for obtaining a kidney transplant.
“Prison creates a more intense form of punishment for critically ill prisoners,” U.S. District Judge Richard Holwell said. He added, however, that illness does not provide “a get-out-of-jail-free card.”
The judge also cited the multimillionaire’s charitable work including helping victims of natural disasters in Sri Lanka, Pakistan and in the United States.
Rajaratnam, standing with his lawyers and looking straight ahead, was expressionless after hearing the sentence. Before the judge announced his ruling, Rajaratnam said “No thank you, Your Honor,” when asked if he wanted to make a statement.
Rajaratnam’s lawyers, whose client showed no obvious signs of poor health during the 80-minute hearing yesterday, have said that a long prison term would amount to a death sentence.