It appears Mr. Rajaratnam isn’t yet done receiving the bad news. U.S. District Judge Jed Rakoff yesterday ordered the vilified inside trader to pay a record $92,805,705 penalty in a related U.S. Securities and Exchange Commission (SEC) civil case. (Cue the canned cash register audio clips.)
Judge Rakoff said that SEC civil penalties are designed to make insider trading a “money-losing proposition not just for this defendant, but for all who would consider it.”
The penalty is in addition to the $63.8 million that Rajaratnam already paid in the criminal case, including a forfeiture of $53.8 million and a $10 million fine. Rajaratnam’s lawyers unsuccessfully lobbied to have the civil penalties dropped, saying they were unwarranted.
“This case cries out for the kind of civil penalty that will deprive this defendant of a material part of his fortune,” Judge Rakoff said in his order.
Icing the cake, the civil penalty is the largest penalty ever assessed against an individual in an SEC insider trading case.
“The penalty imposed today reflects the historic proportions of Raj Rajaratnam’s illegal conduct and its impact on the integrity of our markets,” Robert Khuzami, director of the SEC’s Division of Enforcement, said in a statement.
The SEC brought civil charges against Rajaratnam on Oct. 16, 2009, alleging that he and others at Galleon Management LP engaged in a widespread insider trading scheme. The SEC subsequently amended its complaint in November 2009 and January 2010, adding more defendants and alleging additional insider trading schemes that cumulatively generated more than $52 million in illegal gains.
Last month, Rajaratnam was sentenced to 11 years in prison for his role in the scandal, which also was the longest jail term handed out for insider trading.
For more, read the New York Times.