WASHINGTON (AP) — The brother of a jailed former hedge fund boss will be barred for at least five years from the securities industry and pay about $841,000 to settle a civil insider trading case against him.
The Securities and Exchange Commission announced the settlement Thursday with Rengan Rajaratnam. He was acquitted in July in a federal criminal trial of conspiring with his brother, one-time billionaire hedge fund boss Raj Rajaratnam, to cheat on Wall Street. The SEC filed related civil charges against Rengan Rajaratnam in March 2013.
Raj Rajaratnam is serving an 11-year sentence in one of the biggest insider trading cases mounted by federal prosecutors. The government said he earned up to $75 million illegally by trading on secrets provided by corrupt employees of public companies, and a network of analysts and portfolio managers who also obtained inside information.
Rengan Rajaratnam's acquittal was the first loss for federal prosecutors in the Galleon Group case after dozens of insider trading convictions in prosecutions that relied heavily on wiretaps and the testimony of those who pleaded guilty.
Two dozen other defendants have pleaded guilty or were convicted in the case. In all, prosecutors have obtained guilty pleas or jury verdicts against 81 individuals in insider trading cases in the last six years.
The prosecutors had alleged that Rengan Rajaratnam joined his brother to cheat in the stock market in 2008 on the securities of two technology companies.
In his settlement with the SEC, he neither admitted nor denied the agency's allegations but did agree to refrain from future violations of the securities laws.
He also agreed to pay $372,264.42 in restitution plus $96,714.27 in interest and a $372,264.42 civil penalty. Rengan Rajaratnam will be barred from working for any brokerage firm, investment adviser firm or municipal securities dealer for five years, after which time he could apply to be reinstated.
Daniel Gitner, an attorney representing Rengan Rajaratnam, noted that his client was acquitted in the criminal case.
"The SEC elected to offer, and Rengan elected to accept, a no admit-no deny settlement," Gitner said in a statement. "Rengan is moving on to the next phase of his life."