Galleon Group hedge fund manager Raj Rajaratnam may have to wait in jail for his insider trading appeal to the Second Circuit Court of Appeals. The fallen financier is due to begin serving an 11-year sentence for securities fraud on Monday - the longest sentence ever ordered for insider trading violations.
The three-judge Second Circuit panel has not yet ruled in the case, but the judges seem concerned that former-billionaire Rajaratnam would pose a flight risk; Judge Dennis Jacobs expressed concern that Rajaratnam would rather be living a lavish lifestyle in his native Sri Lanka than serving time in the U.S.
Patricia Millet, one of Rajaratnam’s attorneys, told the panel that Rajaratnam is not a flight risk because his family lives in the U.S., and his passport has been surrendered, reports The New York Times.
The Galleon chief’s legal team will argue to the Second Circuit Court of Appeals that the government improperly obtained wiretaps in its investigation. Rajaratnam has requested to remain free on $100 million bail pending his appeal.
Rajaratnam’s attorneys claim that the FBI knew about an ongoing Securities and Exchange Commission (SEC) investigation into Rajaratnam, but failed to mention that fact in its wiretap application. U.S. Attorney Jonathan Streeter counters that U.S. District Judge Richard Holwell, who presided over Rajaratnam’s trial, previously determined that the SEC investigation information would not have affected the decision to permit the wiretaps, reports the Associated Press.
Rajaratnam was convicted in May on 14 counts of insider trading - 9 counts of securities fraud and 5 counts of conspiracy to commit securities fraud. In addition to the court-ordered $10 million criminal fine and a $53.8 million illegal gains forfeiture, Rajaratnam must pay a $92.8 million fine to the SEC, reports the Los Angeles Times.
Update (Dec. 1, 4:30 p.m.) The Second Circuit Court of Appeals has denied Raj Rajaratnam’s request for bail, reports The Wall Street Journal.
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