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From Securities Regulation Daily, October 23, 2014

SEC imposes industry bar on Rengan Rajaratnam in settling insider trading action

Jim Hamilton, J.D., LL.M.

Former hedge fund manager Rajarengan “Rengan” Rajaratnam has settled an SEC insider trading enforcement action against him by agreeing to pay more than $840,000 and accept securities industry bars. Without admitting or denying the SEC’s allegations, the hedge fund manager agreed to be permanently enjoined from violating securities antifraud provisions and to pay $372,264.42 in disgorgement, $96,714.27 in prejudgment interest, and a $372,264.42 penalty. Under the settlement, he would be barred from association with any investment adviser, broker, dealer, municipal securities dealer, or transfer agent with the right to apply for reentry after five years. The settlement is subject to court approval.

In a statement, Andrew Ceresney, Director of the Division of Enforcement, said that the settlement ensures that the former hedge fund manager is “out of the industry and paying a serious price for breaking the law.”

The SEC filed the civil charges in 2013 in the Southern District of New York against Rengan Rajaratnam for his role in the widespread insider trading scheme conducted by his brother Raj Rajaratnam and hedge fund advisory firm Galleon Management. The SEC said that the insider trading occurred in securities of more than 15 companies for illicit gains totaling nearly $100 million. The SEC has now obtained court judgments or settlements in Galleon-related enforcement actions against 35 defendants, resulting in approximately $165 million in monetary sanctions.

In July of 2014, a federal jury in the Southern District of New York acquitted the former hedge fund manager of conspiracy to commit securities fraud in an insider trading case (U.S. v. Rajaratnam, July 8, 2014). In the criminal action, the government had alleged that the defendant participated in a scheme to defraud by obtaining, sharing and disclosing material inside information belonging to public companies and executing securities transactions on the basis of inside information.

MainStory: TopStory FraudManipulation

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