SEC Hits Rajaratnam With Record $92.8M Penalty
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The SEC obtained a record $92.8 million penalty against hedge fund manager Raj Rajaratnam for widespread insider trading. This is the largest penalty ever against an individual in an SEC insider trading case. Rajaratnam was found guilty of insider trading that generated over $52 million in illicit gains and was ordered to pay over $156.6 million in civil and criminal penalties and fines. The SEC's action against Rajaratnam was part of a larger probe that has resulted in charges against 29 individuals and entities for over $90 million in illegal profits.
![SEC Obtains Record $92.8 Million Penalty Against Raj Rajaratnam
Home | Previous Page
SEC Obtains Record $92.8 Million Penalty Against Raj
Rajaratnam
FOR IMMEDIATE RELEASE
2011-233
Washington, D.C., Nov. 8, 2011 – The Securities and Exchange Commission
today obtained a record financial penalty of $92.8 million against billionaire
hedge fund manager Raj Rajaratnam for widespread insider trading.
The final judgment entered today by the Honorable Jed S. Rakoff of the
U.S. District Court for the Southern District of New York finds Rajaratnam
liable for a civil monetary penalty of $92,805,705, which marks the largest
penalty ever assessed against an individual in an SEC insider trading case.
The SEC brought civil charges against Rajaratnam on Oct. 16, 2009,
alleging that he and several others including his New York-based hedge
fund advisory firm Galleon Management LP engaged in a massive insider
trading scheme. The SEC subsequently amended its complaint in November
2009 and January 2010, adding several more defendants and alleging
additional insider trading schemes that cumulatively generated more than
$52 million in illicit gains.
“The penalty imposed today reflects the historic proportions of Raj
Rajaratnam’s illegal conduct and its impact on the integrity of our markets,”
said Robert Khuzami, Director of the SEC’s Division of Enforcement.
The SEC’s enforcement action against Rajaratnam and Galleon was part of a
larger insider trading probe that has resulted in civil charges against a total
of 29 individuals and entities including hedge fund advisers, Wall Street
professionals, and corporate insiders. The SEC alleged insider trading in the
securities of more than 15 publicly traded companies for more than $90
million in illicit profits or losses avoided.
In the parallel criminal case, the SEC provided significant assistance to the
U.S. Attorney’s Office for the Southern District of New York in its successful
criminal prosecution of Rajaratnam, who was found guilty on May 11, 2011,
of all 14 counts charged, including five counts of conspiracy to commit
securities fraud and nine counts of securities fraud. Following the jury
verdict, Rajaratnam was sentenced to a term of imprisonment of 11 years,
and was ordered to pay more than $53.8 million in forfeiture of illicit gains
and $10 million in criminal fines.
The total amount of monetary sanctions imposed on Rajaratnam in the civil
and criminal cases is more than $156.6 million.
In addition to imposing a record penalty, today’s final judgment in the SEC’s
civil action permanently enjoins Rajaratnam from future violations of
Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities
Exchange Act of 1934 and Exchange Act Rule 10b-5. The order further finds
that Rajaratnam is liable for an unspecified amount of disgorgement and
prejudgment interest, which are deemed satisfied by the forfeiture ordered
against Rajaratnam in the criminal case.
Separately, on Oct. 27, 2011, the SEC obtained a final judgment by consent
http://www.sec.gov/news/press/2011/2011-233.htm[28-12-2011 19:58:27]](https://image.slidesharecdn.com/secobtainsrecord92-8millionpenaltyagainstrajrajaratnam-111230134636-phpapp01/85/SEC-obtains-record-US-92-8-million-penalty-against-Raj-Rajaratnam-1-320.jpg)
![SEC Obtains Record $92.8 Million Penalty Against Raj Rajaratnam
against Rajaratnam’s firm Galleon Management, permanently enjoining it
from violating the antifraud provisions of the federal securities laws and
holding it jointly and severally liable for the monetary relief ordered against
Rajaratnam.
On Oct. 26, 2011, the SEC charged former McKinsey & Co. worldwide head
Rajat K. Gupta with insider trading for illegally tipping Rajaratnam while
serving on the boards of Goldman Sachs and Procter & Gamble. The SEC
also filed new insider trading charges against Rajaratnam alleging that he
caused various Galleon funds to trade based on Gupta’s inside information,
generating illicit profits or loss avoidance of more than $23 million. This
insider trading enforcement action against Rajaratnam remains pending
before Judge Rakoff.
# # #
For more information about this enforcement action, contact:
George S. Canellos
Director, SEC’s New York Regional Office
(212) 336-1020
David Rosenfeld
Associate Director, SEC’s New York Regional Office
(212) 336-0153
Sanjay Wadhwa
Associate Director, SEC’s New York Regional Office, and Deputy Chief, SEC’s
Market Abuse Unit
(212) 336-0181
http://www.sec.gov/news/press/2011/2011-233.htm
Home | Previous Page Modified: 11/08/2011
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SEC Hits Rajaratnam With Record $92.8M Penalty
- 1. SEC Obtains Record $92.8 Million Penalty Against Raj Rajaratnam Home | Previous Page SEC Obtains Record $92.8 Million Penalty Against Raj Rajaratnam FOR IMMEDIATE RELEASE 2011-233 Washington, D.C., Nov. 8, 2011 – The Securities and Exchange Commission today obtained a record financial penalty of $92.8 million against billionaire hedge fund manager Raj Rajaratnam for widespread insider trading. The final judgment entered today by the Honorable Jed S. Rakoff of the U.S. District Court for the Southern District of New York finds Rajaratnam liable for a civil monetary penalty of $92,805,705, which marks the largest penalty ever assessed against an individual in an SEC insider trading case. The SEC brought civil charges against Rajaratnam on Oct. 16, 2009, alleging that he and several others including his New York-based hedge fund advisory firm Galleon Management LP engaged in a massive insider trading scheme. The SEC subsequently amended its complaint in November 2009 and January 2010, adding several more defendants and alleging additional insider trading schemes that cumulatively generated more than $52 million in illicit gains. “The penalty imposed today reflects the historic proportions of Raj Rajaratnam’s illegal conduct and its impact on the integrity of our markets,” said Robert Khuzami, Director of the SEC’s Division of Enforcement. The SEC’s enforcement action against Rajaratnam and Galleon was part of a larger insider trading probe that has resulted in civil charges against a total of 29 individuals and entities including hedge fund advisers, Wall Street professionals, and corporate insiders. The SEC alleged insider trading in the securities of more than 15 publicly traded companies for more than $90 million in illicit profits or losses avoided. In the parallel criminal case, the SEC provided significant assistance to the U.S. Attorney’s Office for the Southern District of New York in its successful criminal prosecution of Rajaratnam, who was found guilty on May 11, 2011, of all 14 counts charged, including five counts of conspiracy to commit securities fraud and nine counts of securities fraud. Following the jury verdict, Rajaratnam was sentenced to a term of imprisonment of 11 years, and was ordered to pay more than $53.8 million in forfeiture of illicit gains and $10 million in criminal fines. The total amount of monetary sanctions imposed on Rajaratnam in the civil and criminal cases is more than $156.6 million. In addition to imposing a record penalty, today’s final judgment in the SEC’s civil action permanently enjoins Rajaratnam from future violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Exchange Act Rule 10b-5. The order further finds that Rajaratnam is liable for an unspecified amount of disgorgement and prejudgment interest, which are deemed satisfied by the forfeiture ordered against Rajaratnam in the criminal case. Separately, on Oct. 27, 2011, the SEC obtained a final judgment by consent http://www.sec.gov/news/press/2011/2011-233.htm[28-12-2011 19:58:27]
- 2. SEC Obtains Record $92.8 Million Penalty Against Raj Rajaratnam against Rajaratnam’s firm Galleon Management, permanently enjoining it from violating the antifraud provisions of the federal securities laws and holding it jointly and severally liable for the monetary relief ordered against Rajaratnam. On Oct. 26, 2011, the SEC charged former McKinsey & Co. worldwide head Rajat K. Gupta with insider trading for illegally tipping Rajaratnam while serving on the boards of Goldman Sachs and Procter & Gamble. The SEC also filed new insider trading charges against Rajaratnam alleging that he caused various Galleon funds to trade based on Gupta’s inside information, generating illicit profits or loss avoidance of more than $23 million. This insider trading enforcement action against Rajaratnam remains pending before Judge Rakoff. # # # For more information about this enforcement action, contact: George S. Canellos Director, SEC’s New York Regional Office (212) 336-1020 David Rosenfeld Associate Director, SEC’s New York Regional Office (212) 336-0153 Sanjay Wadhwa Associate Director, SEC’s New York Regional Office, and Deputy Chief, SEC’s Market Abuse Unit (212) 336-0181 http://www.sec.gov/news/press/2011/2011-233.htm Home | Previous Page Modified: 11/08/2011 http://www.sec.gov/news/press/2011/2011-233.htm[28-12-2011 19:58:27]