Rajaratnam sentencing could be Wall St warning

Sri Lankan-born Rajaratnam,54,was convicted in May on 14 counts of conspiracy and securities fraud.

Raj Rajaratnam,convicted in the biggest US insider trading case for years,faces a sentence of up to 24 years prison next week at the close of a case seen as making an example of the hedge fund tycoon.

The sentencing hearing on October 13 before federal Judge Richard Holwell in New York will be closely watched for the message it sends to Wall Street.

Sri Lankan-born Rajaratnam,54,was convicted in May on 14 counts of conspiracy and securities fraud related to his use of illegal insider tips for an edge on multi-million dollar stock market trades.

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The trial grabbed attention because it exposed deeply hidden corruption on Wall Street and also because of the ruthlessness of prosecutors who took the unusual step for a white collar probe of using telephone wiretaps to gather evidence.

According to prosecutors,the brilliant founder of the Galleon Group hedge fund netted about USD 72 million on the basis of those tips,which included deals on shares in Goldman Sachs,Intel Corp,and Google Inc.

In final pre-sentencing arguments on Tuesday,prosecutors demanded Rajaratnam be sentenced to as much as 293 months,or about 24-1/2 years,in prison,and a minimum of 19.5 years.

They told Holwell that Rajaratnam should be punished for personal gains and also for the money that his illegal trades earned Galleon.

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Prosecutor Reed Brodsky argued that Rajaratnam further aggravated his crime by acting as leader of a wider conspiracy.

“Mr Rajaratnam is uniquely situated… (as) an individual at the top of a pyramid in his hedge fund” with “interlocking trading schemes,” he said.

Defense lawyers made a combative last stand to save their client from spending what could be the rest of his life behind bars.

The core of their argument is that insider trading is mostly a victimless crime and that nothing Rajaratnam did caused others to lose money. In addition,they dispute government allegations that Rajaratnam led any sort of network,instead insisting that most of the time he was an above-the-board trader.

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As a result,gains directly attributable to Rajaratnam were less than USD 8 million and his sentence should be as low as 6-1/2 years,the defense says.

Jacob Frenkel,a lawyer specialising in white collar crime and securities enforcement,told AFP that given tough sentences already handed down to lesser participants in the Galleon scandal,the judge will probably throw the book at Rajaratnam.