In a press release published this Thursday, the Securities and Exchange Commission stated that Rengan Rajaratnam had agreed to pay $840,000 in fines and restitution. Under the terms of the settlement, the former hedge-fund manager is to be barred from any association with investment advisers, brokers, dealers, municipal securities dealers or transfer agents for at least five years.
Rengan Rajaratnam: Past criminal trial
Three months ago Rajaratnam was found not guilty of a single-count of conspiracy to commit insider trading. His trial was part of a longstanding crackdown on insider trading in the hedge fund industry which has been spearheaded by Preet Bharara, the United States attorney in Manhattan. The jury reached a verdict in in less than four hours, and his acquittal marked the first defeat of Bharara’s crackdown.
Rengan Rajaratnam is a younger brother of Raj Rajaratnam, founder of the Galleon Group hedge fund. In 2011 he was convicted of insider trading and is currently serving an 11-year prison sentence. Rengan found himself accused of seeking to profit from inside information during his time at Galleon.
The insider trading took place in securities of over 15 companies, and made its ringleaders over $100 million in illegal profits. 35 individuals have so far reached court judgments or settlements in relation to insider trading at Galleon.
Rengan Rajaratnam’s civil settlement
The civil charges were first filed against Rajaratnam in March 2013 for his role in the insider trading scandal. The settlement means that Rengan Rajaratnam has neither admitted nor denied the allegations made against him, and must still be approved by a federal judge.
The SEC is apparently happy with the outcome, with director of the division of enforcement Andrew J. Ceresney stating that “the settlement ensures he’s out of the industry and paying a serious price for breaking the law.”
In five years time Rajaratnam will be able to apply for readmission to the securities industry, hopefully having learned his lesson.