SEC Obtains Record $92.8 Million Penalty Against Raj Rajaratnam

November 9, 2011

The SEC obtained a record financial penalty of $92.8 million against billionaire hedge fund manager Raj Rajaratnam for widespread insider trading, the largest penalty ever assessed against an individual in an SEC insider trading case.

The SEC brought civil charges against Rajaratnam on Oct. 16, 2009, alleging that he and several others including his New York-based hedge fund advisory firm Galleon Management LP engaged in a massive insider trading scheme.  The SEC subsequently amended its complaint in November 2009 and January 2010, adding several more defendants and alleging additional insider trading schemes that cumulatively generated more than $52 million in illicit gains.  The SEC’s enforcement action against Rajaratnam and Galleon was part of a larger insider trading probe that has resulted in civil charges against a total of 29 individuals and entities including hedge fund advisers, Wall Street professionals, and corporate insiders.  The SEC alleged insider trading in the securities of more than 15 publicly traded companies for more than $90 million in illicit profits or losses avoided.

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Enforcement Actions, Investment Advisers