Raj Rajaratnam, founder of the Galleon Group hedge fund, received the longest-ever sentence for insider trading last month and now he’s broken another record.
Rajaratnam on Tuesday was ordered to pay a $92.8 million penalty in a civil suit which when combined with last months fines and forfeitures ( $10 million fine and $53.8 million in forfeited profits) takes his overall penalties to $156.6 million, a new record for insider trading.
According to the federal judge overseeing his case the huge penalty was necessary in order to send a message to other insider traders that getting caught is a “money-losing proposition” that shouldn’t be taken lightly.
The judge continued:
“When to this is added the huge and brazen nature of Rajaratnam’s insider trading scheme, which, even by his own estimate, netted tens of millions of dollars and continued for years, this case cries out for the kind of civil penalty that will deprive this defendant of a material part of his fortune.”
While it is still not clear how much money Mr. Rajaratnam has left Judge Jed S. Rakoff said a review of the government’s presentence report shows that his net worth “considerably exceeds” all penalties that have been imposed against the billionaire investor during his trials.
Do you believe the federal government should seize all of a trader’s assets when they are found guilty of insider trading or is a large penalty and lengthy jail sentence enough of a punishment to deter future issues?