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AP: Hedge fund exec gets 11 years for insider trading

-By Larry Neumeister 

October 13, 2011- Raj Rajaratnam, the hedge fund billionaire at the center of the biggest insider-trading case in U.S. history, was sentenced Thursday to 11 years behind bars - the stiffest punishment ever handed out for the crime.

"His crimes and the scope of his crimes reflect a virus in our business culture that needs to be eradicated," U.S. District Judge Richard J. Holwell said. "Simple justice requires a lengthy sentence."

The 54-year-old founder of the Galleon Group hedge fund was also fined $10 million and ordered to forfeit $53.8 million in what the judge said were illicit profits from trading on confidential corporate information.

Prosecutors said Rajaratnam made as much as $75 million in all by cultivating a network of friends, former classmates and other tipsters at various companies and investment firms who supplied him with early word on such things as mergers and earnings announcements. In return, they received kickbacks or a chance to get in on the action.

Among the companies he profited from were Google, IBM, Hilton Hotels, Intel, Advanced Micro Devices and Goldman Sachs.

The sentencing was the last major act in a series of prosecutions that followed Rajaratnam's arrest in 2009, the same year he was ranked No. 559 by Forbes magazine among the world's wealthiest billionaires, with a $1.3 billion net worth. More than two dozen people were arrested in the investigation, nicknamed Perfect Hedge, and all were convicted.

The scandal - along with the 2008 financial meltdown and the Wall Street abuses it exposed - stoked populist anger in the U.S. and complaints that the stock market is a sucker's game, rigged by insiders.

The judge called it "an assault on the free markets that are a fundamental element of our democratic society. There may not be readily identifiable victims, but when the playing field is not level, the integrity of the marketplace is called into question and the public suffers."

Asked at his sentencing if he would like to speak, Rajaratnam responded: "No, thank you, Your Honor."



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