• Galleon Group LLC founder stuck with insider trading conviction, court says
• Rajaratnam still scheduled for July 2021 prison release
Raj Rajaratnam, who used a massive network of tipsters to make insider trading profits of $63.8 million, can’t overturn his conviction and must remain in prison, a federal appeals court said.
Rajaratnam’s 2011 conviction for insider trading won’t be overturned and he will have to serve the remainder of his prison term, the U.S. Court of Appeals for the Second Circuit said in a June 1 summary order. Rajaratnam, Galleon Group LLC’s founder, is scheduled for a July 2021 release.
The former hedge fund manager sought collateral relief from his insider trading conviction, the order said. Rajaratnam appealed the conviction in 2013, but the Second Circuit upheld it the same year.
Rajaratnam told the court that its 2014 decision in another case — requiring that the government prove that a remote tippee knew an insider had disclosed information in exchange for a personal benefit — means another look at his case is warranted. He argued that the government hadn’t proven tippee knowledge for several of the trades for which he was convicted, the order said.
However, in U.S. v. Newman, the Second Circuit noted that “every district court in the circuit save one already required” proof of tippee knowledge, the order said. That opinion even used Rajaratnam’s conviction as an example because the jury in his case received an instruction on tippee knowledge at Rajaratnam’s request, the Second Circuit order said.
Christine H. Chung, a Selendy & Gay PLLC partner who represented Rajaratnam before the Second Circuit, declined to comment.
The case is Rajaratnam v. US, 2d Cir., Nos. 17-1405-pr (L) and 17-1411-pr (CON), summary order released 6/1/18.