A prosecutor told a federal judge Tuesday that a one-time billionaire hedge fund founder deserves a lengthy prison sentence because he made more than $70 million through illegal trades based on inside information.
Assistant U.S. Attorney Andrew Michaelson urged U.S. District Judge Richard Holwell to reject defense arguments that Raj Rajaratnam made as little as $7 million through his trades. Rajaratnam is scheduled to be sentenced next week after his conviction earlier this year.
Prosecutors say he should be sentenced to between 19 1/2 years to 24 1/2 years in prison. Defense lawyers have urged leniency, in part for health reasons that remain under seal. On Monday, lawyers for the 54-year-old founder of the Galleon Group of funds asked the judge to keep under seal arguments about their client's medical issues, saying it may set off a "salacious and morbid media feeding frenzy."
Calling Rajaratnam a "serial inside trader at a multibillion dollar hedge fund," Michaelson said the judge should reject defense arguments that Rajaratnam should only be held accountable for trades he made in personal accounts.
He said Rajaratnam racked up $30 million in gains by using secrets he was told to trade ahead of the earnings announcements of public companies while making another $30 million by trading ahead of public announcements of mergers and acquisitions. The prosecutor said more than $50 million in profits was realized within two days of public announcements of information Rajaratnam received ahead of time.
Another prosecutor, Reed Brodsky, said Rajaratnam could have been charged with up to 1,000 counts of insider trading charges because he engaged in illegal practices so frequently.
Defense lawyer Samidh Guha branded Brodsky's claim hyperbole and a "personal attack" on his client. He said prosecutors had gotten "absurd and ridiculous."
The Sri Lanka-born money manager was convicted in May of securities fraud charges after a jury reasoned that he made trades based on inside information provided by friends and business associates.