Insider Trading Informant Khan Gets 1-Year Prison Term

NEW YORK (Reuters)—Roomy Khan, a one-time technology company executive who became a key FBI informant in the insider-trading case against hedge fund manager Raj Rajaratnam, was sentenced to 12 months in prison on Thursday [Jan. 31].

Defense lawyers had sought five years of probation for Mr. Khan, 54, who pleaded guilty in 2009 to securities fraud, obstruction of justice and conspiracy. U.S. District Judge Jed Rakoff in Manhattan also ordered she forfeit nearly $1.53 million.

Ms. Khan is one of only a few women who have been charged in the government’s broad insider trading crackdown, which has involved money managers, traders, consultants and lawyers. Her cooperation helped U.S. authorities in the Rajaratnam prosecution.

Mr. Rajaratnam, founder of the Galleon Group, was convicted by a federal jury in May 2011 and is now serving an 11-year prison term.

But prosecutors said Ms. Khan also obstructed the investigation, at times lying to investigators, alerting co-conspirators that the U.S. Securities and Exchange Commission had contacted her, and deleting e-mail communications.

Ms. Khan, whose voice broke up during her sentencing, said she was sorry, not just to the court but also to her daughter, husband and parents. She said she lied to the government to protect herself, her friends and family and that she engaged in insider trading to “protect my life and status.”

“As I reflect back, I am horrified by the choices I made,” she said.

The case is United States v. Khan, case No. 09-991, in U.S. District Court, Southern District of New York.

By Nate Raymond

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