NEW YORK (TIP): A former Indian Americanemployee of Galleon Group, who played a key role inthe conviction of hedge fund billionaire RajRajaratnam for insider trading, has been sentenced toone year in prison.Federal district judge Jed S Rakoff on Thursday,January 31st, also ordered Roomy Khan, 54, to servethree years of probation and pay $1.525 million inrestitution, money she made by trading onconfidential information about Google and HiltonHotels among others.
Despite the assistance that Khan, a DelhiUniversity graduate, had provided prosecutors in thecase against Rajaratnam, her actions-in particular,lying to federal investigators-were serious enough tomerit a prison term, Rakoff said.”You cannot have it both ways,” he was quoted assaying by the New York Times. “You cannot obstructjustice and then say, ‘Well, because I’ve done goodthings since, forget about it.'”The punishment, Rakoff added, sends a “veryimportant message” about the consequences ofhindering a government investigation.Khan, who had sought five years of probation,pleaded guilty in 2009 to conspiracy to commitsecurities fraud, a charge that carried a maximumprison sentence of 20 years.
She also admitted to lying to Federal Bureau ofInvestigation (FBI) agents.The case was the second time Khan had beenconvicted of illegally passing information toRajaratnam, according to the Times.In a letter to Rakoff, Khan described how shereturned to illegal trading, saying she needed moneyand felt pressure to maintain appearances.In a separate case not directly related, JasonPflaum, a witness who gathered evidence about hisformer Indian-American boss, hedge fund managerSamir Barai, was sentenced to two years ofprobation.Pflaum, who pleaded guilty in 2010 to securitiesfraud and conspiracy to commit securities fraud, hadhelped prosecutors secure a guilty plea from Barai oninsider trading charges, Times said.