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Rengan Rajaratnam, who was cleared of criminal insider trading charges following the conviction of his older brother, Galleon Group founder Raj Rajaratnam, has agreed to pay more than $841,000 to resolve civil claims by the US Securities and Exchange Commission.
The settlement was filed on Thursday by the SEC in New York federal court, three months after a federal jury in Manhattan acquitted Rengan Rajaratnam of conspiring to engage in insider trading, a rare defeat for US prosecutors. Under the agreement with the SEC, Rajaratnam will pay the $841,243 in four equal payments and will neither admit nor deny wrongdoing. The deal must be approved by US District Judge John Koeltl in Manhattan.
As part of the agreement, Rajaratnam, 43, also agreed to be barred from the securities industry, the SEC said.
"The settlement ensures he's out of the industry and paying a serious price for breaking the law," Andrew Ceresney, the SEC's enforcement director, said in a statement.
Daniel Gitner, a lawyer for Rajaratnam, emphasized in a statement that his client had been found not guilty in the criminal trial and the settlement did not include an admission of wrongdoing.
"Rengan is moving on to the next phase of his life," Gitner said.
The SEC and Rajaratnam disclosed settlement talks in July, days after a jury acquitted the onetime portfolio manager at his brother's Galleon hedge fund of conspiring to engage in insider trading.
Prosecutors had accused Rengan Rajaratnam of participating in an insider trading scheme with his brother involving technology companies Clearwire Corp and Advanced Micro Devices Inc in 2008.
The SEC lawsuit included some of the same allegations but also contended Rengan Rajaratnam engaged in a broader scheme from 2006 to 2008 involving additional stocks and trading during his time at Sedna Capital Management, a fund he founded.
Those other stocks included Polycom Inc, Hilton Hotels Corp and Akamai Technologies Inc, the SEC said. The trading resulted in more than $3 million in illicit gains, the SEC said in the lawsuit, which was filed in March 2013 on the day Rajaratnam was also indicted.
Rajaratnam's acquittal in the criminal case represented the first loss in more than 80 insider trading cases brought by Manhattan US Attorney Preet Bharara since 2009 as part of a major crackdown.
Raj Rajaratnam, 57, is serving an 11-year prison sentence after being found guilty at trial in 2011 of engaging in an insider trading scheme that resulted in $63.8 million in illicit profit.
The case is SEC v. Rajarengan Rajaratnam, US District Court for the Southern District of New York, No. 13-cv-1894.
