New York, Nov 9 (IANS): After getting the longest prison sentence ever for insider trading, hedge fund tycoon Raj Rajaratnam has been ordered to pay a record $92.8 million penalty in a related civil case.
The fine imposed Tuesday on former head of the Galleon hedge fund group Sri Lankan-born Rajaratnam was the largest the Securities and Exchange Commission has ever assessed against an individual.
US District Court Judge Jed Rakoff stressed that he meted out the maximum financial penalty of $92.8 million, three times the $30.93 million the defence claimed Rajaratnam had made in illegal profits and avoided losses, to send a clear message that anyone caught engaging in unlawful insider trading will "pay severely in monetary terms."
He also said such a penalty was appropriate because the net worth of Rajaratnam, a former billionaire, "considerably exceeds" the penalties in the criminal case.
"When to this is added the huge and brazen nature of Rajaratnam's insider trading scheme, which, even by his own estimate, netted tens of millions of dollars and continued for years, this case cries out for the kind of civil penalty that will deprive this defendant of a material part of his fortune," Rakoff wrote.
Rajaratnam was found guilty in his criminal jury trial on May 11 of using illegal tips from corporate insiders to reap profits in a handful of stocks, including Intel, Clearwire and Akamai Technologies.
He was sentenced in October to 11 years in prison, ordered to forfeit $53.8 million in illegal gains and fined $10 million.
The fines and monetary sanctions imposed on him in the criminal and civil cases total almost $157 million, the SEC says.
Last month, prosecutors and the SEC filed charges against Indian American Rajat Gupta, a former Goldman Sachs Group Inc director and global head of the McKinsey & Co consulting firm, for allegedly providing Rajaratnam with some of his tips. Gupta has pleaded not guilty in the criminal case.