That is the longest sentence ever handed out for insider trading. Previously, the record was ten years—held by another Galleon employee, Zvi Goffer, and Hafiz Muhammad Zubair Naseem, a former Credit Suisse banker sentenced in 2008.
Prosecutors had sought a sentence of up to more than 20 years in prison, while Rajaratnam's lawyers had asked for no more than 8 years.
Rajaratnam was convicted in May on several charges of insider trading and conspiracy.
Rajaratnam, who headed Galleon Management, was convicted in May on 14 counts of conspiracy and securities fraud for illegally using inside information to trade in stocks such as Goldman Sachs and Intel. The trading generated profits or avoided losses of $72 million, the government estimated.
The sentence was substantially less than the government sought. In an August court filing, the Justice Department proposed a prison sentence of 19 years and seven months to 24 years and five months. Such a term was warranted to “provide just and fair punishment for perhaps the worst insider trading offender (who has been caught to date) in history, and deter others,” the Justice Department wrote.
To build its case against Rajaratnam, the government used tactics traditionally associated with investigations of violent offenses, such as drug dealing and organized crime. Though Rajaratnam did not testify at his trial, the prosecution made extensive use of secretly made recordings of him talking to his associates.
According to the government, Rajaratnam gathered inside information about pending corporate deals and earnings announcements from an array of tipsters including a Goldman Sachs board member, a senior partner at the consulting firm McKinsey & Co., and an employee at another hedge fund.
Rajaratnam, who is in his 50s, will join a list of high-profile, white-collar financial figures sent to prison, including former Enron executive Jeffrey Skilling, former WorldCom executive Bernard Ebbers and Ponzi scheme mastermind Bernard Madoff.
The insider trading case was the most prominent of its kind since Ivan Boesky was convicted a generation ago.
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