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Raj given 11 years for insider trading

October 13, 2011: 11:29 AM ET

Hedge fund manager Raj Rajaratnam gets 11 years for insider trading

Judge Richard Holwell today sent a major rebuke to those who think insider trading is a minor crime, or that it shouldn't be a crime at all. The federal jurist sentenced former hedge fund manager Raj Rajaratnam to more than 11 years in prison, which represents the longest sentence ever handed out for insider trading in the United States.

Rajaratnam had been convicted by a jury back in May on 14 counts of securities fraud and conspiracy, based on an elaborate network of tipsters that helped him and his Galleon hedge fund trade on non-public information.

For example, Galleon made around $17 million in profits by trading shares of Goldman Sachs (GS), thanks to information gleaned from a back-channel relationship with then-Goldman board member Rajat Gupta. The pair also used to work together at an India-focused private equity firm. The SEC recently dropped the administrative action it had brought against Gupta (who strongly denies the allegations), but remains free to refile its charges in federal court.

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Dan Primack
Dan Primack
Senior Editor, Fortune

Dan Primack joined Fortune.com in September 2010 to cover deals and dealmakers, from Wall Street to Sand Hill Road. Previously, Dan was an editor-at-large with Thomson Reuters, where he launched both peHUB.com and the peHUB Wire email service. In a past journalistic life, Dan ran a community paper in Roxbury, Massachusetts. He currently lives just outside of Boston.

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