Nov. 2 (Bloomberg) -- Galleon Group LLC co-founder Raj Rajaratnam shouldn’t have to pay the Securities and Exchange Commission additional penalties after being sentenced to 11 years in prison and fined for insider trading, his lawyers said.
Rajaratnam, 54, was ordered to pay a $10 million fine and forfeit $53.8 million at his Oct. 13 criminal sentencing, his lawyers noted yesterday in a filing in the lawsuit the SEC brought against him and Galleon in federal court in Manhattan.
The former hedge fund manager has “already suffered enormous financial consequences” and his penalty is “sufficient,” his lawyers told U.S. District Judge Jed Rakoff, who is presiding over the SEC case.
The lawyers said that Rakoff called Rajaratnam a “bad guy” during a previous hearing and described him as “someone who committed his wrongdoing to make a lot of money.” The lawyers asked the judge to review a pre-sentencing report prepared by court authorities to better understand him.
“Mr. Rajaratnam cares deeply about leaving behind a better world than the one to which he was born,” the lawyers quote the report as saying. “He truly cares about the causes he champions.”
Rajaratnam and Galleon should disgorge $31.6 million in illegal gains and the losses they avoided, plus prejudgment interest of $9.7 million, the SEC argued in court papers. They should also be fined three times the gains, or $94.7 million, the SEC said.
Rajaratnam’s lawyers disputed the government’s calculation of how much money he earned as a result of the securities fraud and insider tips he received from friends.
They argued Rajaratnam moved swiftly to return all funds to his investors to protect their interest, at great expense and loss of revenue to himself.
“These actions and others that Mr. Rajaratnam has taken during his life, show that he was not motivated by greed or by the desire to make a lot of money,” Terence Lynam, a lawyer for Rajaratnam, said in court papers.
Galleon, which is no longer in business, argued in a separate court filing that it isn’t bound in the SEC case by Rajaratnam’s conviction.
The case is SEC v. Rajaratnam, 09-CV-8811, U.S. District Court, Southern District of New York (Manhattan).
--With assistance from Bob Van Voris in New York. Editors: Peter Blumberg, Michael Hytha
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