Raj Rajaratnam, a self-made hedge fund tycoon convicted in the biggest Wall Street trading scandal in a generation, was ordered on Thursday to serve 11 years in prison, one of the longest sentences ever in an insider-trading case.
The sentence was lighter than the 19-1/2 year minimum prison term that prosecutors had sought, but is still above the 10 years handed down recently in another major insider trading case. Federal inmates typically must serve at least 85 percent of their terms before being eligible for release.
It was not immediately clear if Rajaratnam would be ordered to prison immediately, at a later date, or allowed to remain under house arrest while he appeals his conviction. Prosecutors and defense lawyers were still discussing sentencing matters in court on Thursday morning after the judge announced the intended prison term.
The Galleon Group fund founder, 54, made no statement on his behalf before the sentence was pronounced by U.S. District Judge Richard Holwell at a court hearing in Manhattan. The judge also said he would impose a $10 million fine.
Rajaratnam was convicted of 14 securities fraud and conspiracy charges in May after a two-month trial.
Prosecutors had made Rajaratnam the central figure of a sprawling criminal case, unveiled in October 2009, that touched some of America's top companies, including Goldman Sachs Group Inc, Intel Corp, IBM and the elite McKinsey & Co consultancy.
There's no one who's Mr. Rajaratnam's equal in terms of the length and breadth of his insider trading crimes, Assistant U.S. Attorney Reed Brodsky told the court, urging for the maximum punishment.
Prosecutors called Rajaratnam the modern face of insider trading, putting him in a dubious pantheon of Wall Street power players such as takeover specialist Ivan Boesky and junk bond financier Michael Milken, principal figures in a mid-1980s insider-trading case. Both men served about two years in prison.
The Galleon case sent shock waves through Wall Street and the hedge fund industry, where traders can try to get an edge at all costs. Prosecutors say Rajaratnam and others crossed the line by pumping corporate insiders for corporate earnings or details of mergers that had not yet been announced.
The investigation was marked by the most extensive use of secret FBI phone taps in a white-collar case. Such tactics usually are reserved for Mafia and drug trafficking investigations.
The Galleon case has been a major victory for the U.S. Attorney's Office in Manhattan. Out of 26 people, including traders, lawyers, executives and consultants charged in the case, 25 have pleaded guilty or were convicted at trial of supplying or trading on illicit stock tips. One is at large.
Insider-trading defendants often get sentences lower than what's prescribed in federal guidelines, out of the view that their crime is less harmful than other types of white-collar misdeeds.
But judges have been handing down some tough sentences recently. A former Galleon employee, stock trader Zvi Goffer, 34, was sentenced last month to 10 years in prison and ordered to forfeit $10 million after being found guilty at trial.
(Reporting by Grant McCool; Writing by Martha Graybow; editing by Tim Dobbyn)