Fallen hedge-fund billionaire Raj Rajaratnam just lost his best shot at getting out of prison before 2021.
A New York federal appeals court yesterday rejected Rajaratnam’s bid to toss dozens of secretly recorded phone conversations that led a jury to convict him of a vast insider-trading scheme in 2011.
Lawyers for the Galleon Group co-founder argued that the government’s wiretap application omitted key information, including a parallel Securities and Exchange Commission probe. Wiretaps are generally only approved after traditional investigative methods have been exhausted.
“Rajaratnam’s arguments are not persuasive,” the three-judge panel wrote in its decision, which found that none of alleged misstatements or omissions were material.
The ruling is the latest victory in the government’s massive crackdown on insider trading, which has netted 73 convictions and guilty pleas since 2009.
Rajaratnam’s wiretapped calls were also used to convict ex-Goldman Sachs director Rajat Gupta and extract guilty pleas from co-conspirators, including former IBM executive Robert Moffat and teen beauty-queen-turned trader Danielle Chiesi.
Rajaratnam, who oversaw $7 billion at Galleon Group, was sentenced to 11 years in prison. The 56-year-old has diabetes and is serving his sentence in Devens, a federal prison north of Boston that caters to inmates with medical conditions.