Rajaratnam fails to cut U.S. insider trading conviction, sentence

A federal appeals court on Friday rejected a bid by Raj Rajaratnam, the highest-profile hedge fund manager convicted in a sweeping U.S. crackdown on insider trading, to void much of his 2011 conviction and shorten his 11-year prison term.

By a 3-0 vote, the 2nd U.S. Circuit Court of Appeals in Manhattan said the Galleon Group founder waived his claim that his trades did not qualify as insider trading by not raising it in an earlier appeal, citing “society’s strong interest in the finality of criminal convictions.” It also said Rajaratnam did not show he was “actually innocent.”

The court also rejected Rajaratnam’s challenge to his US$53.8 million forfeiture order.

Jurors had convicted the Sri Lankan native in May 2011 on 14 securities fraud and conspiracy counts.

The appeals court upheld that conviction in June 2013. Rajaratnam’s latest appeal challenged five counts and his culpability for a trade underlying a sixth. Christine Chung, a lawyer for Rajaratnam, declined to comment.

The insider trading probe was led by the office of former U.S. Attorney Preet Bharara in Manhattan, and had since 2009 resulted in more than 80 convictions and guilty pleas.

Prosecutors said Rajaratnam made up to US$63.8 million from 2003 to 2009 through insider trading in stocks such as ebay Inc., Goldman Sachs Group Inc., and Google Inc., now called Alphabet Inc.