New York: Convicted hedge fund tycoon Raj Rajaratnam has already paid more than $ 63 million in penalties, ordered by the judge who sentenced him two weeks ago for insider trading, one of his lawyers said on Friday in New York federal court.
Rajaratnam, 54, is going to prison for 11 years - the longest sentence recorded for an insider-trading case - as the central figure in a broad government crackdown using FBI phone taps. He was convicted by a jury in May.
The lawyer, William White, was arguing before a different Manhattan federal court judge on Friday over what civil penalties the Galleon Group founder should now pay to the US Securities and Exchange Commission (SEC), the government's market regulator.
Without disclosing Rajaratnam's net worth, White said that since the October 13 criminal sentencing proceeding, his client had forfeited more than $ 53 million to the government and paid a $ 10 million fine in addition.
The SEC is now seeking an additional $96.4 million in civil penalties, an SEC lawyer told U.S. District Judge Jed Rakoff on Friday.
Rakoff said he would consider Rajaratnam's ability to pay in making his decision about the dollar amount of civil penalties.
"I'm not a big fan of symbolic gestures," he said. "I'd like there to be a reasonable possibility that it gets paid."
Rajaratnam is a multimillionaire whose Galleon hedge fund managed $ 7 billion at its peak.
Rajaratnam's lawyers believe the punishments handed down by Judge Richard Holwell in the criminal case were sufficient.
"The thrust of our argument is that it would be appropriate to seek civil penalties if not for a criminal case where the punishment was so significant here," White said in court.
Rakoff said he would make a ruling on the civil penalties by November 7. He said during the hearing that the insider-trading statutes were written so that "you will lose your shirt if you are caught," and "you are going to pay severely in monetary terms."
The two sides agree that Rajaratnam is liable in the parallel civil enforcement case, but Rakoff must decide for what amount. He said that under the law, he can impose penalties of $33 million, or double or triple that amount.
The regulator's counsel, Valerie Ann Szczepanik, told the judge that Rajaratnam should pay civil penalties for years of insider-trading, and noted that he lied to the SEC in a 2007 deposition. She said that he then "went back to Galleon and continued his insider trading."
The case is SEC v Galleon Management et al, US District Court, Southern District of New York, No. 09-08811.