Securities and Exchange Commission v. Galleon Management, LP et al

Filing 245

FINAL CONSENT JUDGMENT in favor of Securities and Exchange Commission against Galleon Management, LP, Raj Rajaratnam. (Signed by Judge Jed S. Rakoff on 10/25/2011) (Attachments: # 1 Notice of Right to Appeal)(jnm)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

SECURITIES AND EXCHANGE COMMISSION,
Plaintiff,

09 CV 8811 (JSR)

-against-

ECFCASE

GALLEON MANAGEMENT, LP and
RAJ RAJARATNAM,

Defendants.
FINAL CONSENT JUDGMENT AS TO DEFENDANT GALLEON MANAGEMENT, LP
The Securities and Exchange Commission having filed a Second Amended Complaint
("Complaint") and Defendant Galleon Management, LP ("Defendant'') having entered a general
appearance; consented to the Court's jurisdiction over Defendant and the subject matter of this
action; consented to entry of this Final Consent Judgment; waived findings of fact and
conclusions oflaw; and waived any right to appeal from this Final Consent Judgment:

1.
IT IS HEREBY ORDERED, ADnJDGED, AND DECREED that Defendant and
Defendant's agents, servants, employees, attorneys, and all persons in active concert or
participation with them who receive actual notice of this Final Consent Judgment by personal
service or otherwise are permanently restrained and enjoined from violating, directly or
indirectly, Section lOeb) of the Securities Exchange Act of 1934 (the "Exchange Act") [IS
U.S.C. § 78j(b)] and Rule 10b-S promulgated thereunder [17 C.F.R. § 240.1 Ob-S], by using any
means or instrumentality of interstate commerce, or of the mails, or of any facility of any
national securities exchange, in connection with the purchase or sale of any security:

(a)

to employ any device, scheme, or artifice to defraud;

(b)

to make any untrue statement of a material fact or to omit to state a material fact
necessary in order to make the statements made, in the light of the circumstances
under which they were made, not misleading; or

(c)

to engage in any act, practice, or course of business which operates or would
operate as a fraud or deceit upon any person.

II.
IT IS HEREBY FURTHER ORDERED, ADmDGED, AND DECREED that Defendant
and Defendant's agents, servants, employees, attorneys, and all persons in active concert or
participation with them who receive actual notice of this Final Consent Judgment by personal
service or otherwise are permanently restrained and enjoined from violating Section 17(a) of the
Securities Act of 1933 (the "Securities Act") (15 U.S.C. § 77q(a)] in the offer or sale of any
security by the use of any means or instruments of transportation or communication in interstate
commerce or by use of the mails, directly or indirectly:
(a)

to employ any device, scheme, or artifice to defraud;

(b)

to obtain money or property by means ofany untrue statement of a material fact
or any omission of a material fact necessary in order to make the statements
made, in light of the circumstances under which they were made, not misleading;
or

(c)

to engage in any transaction, practice, or course of business which operates or
would operate as a fraud or deceit upon the purchaser.

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III.
IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant
shall be obligated,jointlyand severally, for payment of any disgorgement, prejudgment interest
and civil penalty ordered against Raj Rajaratnam with respect to the claims that have been
asserted against him in this action. To the extent any monetary relief ordered by this Court
against Raj Rajaratnam is subsequently vacated by this Court based on a decision on appeal in
this action or in the parallel criminal action titled United States v. Rajaratnam, 09 CR 1184

(RJH), Defendant's joint and several obligation shall be vacated to the same extent.
IV.
IT IS FURTIIER ORDERED, ADJUDGED, AND DECREED that the Consent is
incorporated herein with the same force and effect as iffully set forth herein, and that Defendant
shall comply with all ofthe undertakings and agreements set forth therein.

V.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that this Court shall retain
jurisdiction of this matter for the pwposes of enforcing the tenus of this Final Consent Judgment.
VI.
There being no just reason for delay, pursuant to Rule 54(b) of the Federal Rules of Civil
Procedure, the Clerk is ordered to enter this Final Consent Judgment forthwith and without
further notice.

Dated:

/O&.5/-tL
I
7
United States District Judge

3

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

SECURITIES ANI) EXCHANGE COMMISSION,

Plaintiff,
-against-

09 CV8811 (JSR)

ECFCASE

GALLEON MANAGEMENT, LP and

RAJ RAJARATNAM,
Defendants.

CONSENT OF DEFENDANT GALLEON MANAGEMENT,LP
1.

Defendant Galleon Management, LP ("Defendant") acknowledges having been

served with the Second Amended Complaint ("Complaint") in this action, has entered a general
appearance. and admits the Court's jurisdiction over Defendant and over the subject matter of

this action.
2.

Defendant hereby consents to the entry of the final judgment in the fonn attached

hereto (the "Final Consent Judgment") and incorporated by reference herein,. which, among other
things:
(a)

permanently restrains and enjoins Defendant from violation ofSection

1O(b) of the Securities Exchange Am of 1934 ("'Exchange Act'') [15
U.S.C. § 78j(b)], and Rule 10b-S thereunder [17 C.F.R. § 240.1 Ob-5], and
Section 17(a) of the Securities Act of 1933 e'Securities Act') [15 U.S.C.

§§ 77q(a)]; and
(b)

orders Defendant jointly and severally obligated to pay any disgorgement,
prejudgment interest, and civil penalty ordered against Raj Rajaratnam

with respect to the claims that have been asserted against him in this
action.
3.

To the extent any monetary relief ordered by this Court against Raj Rajaratnam is

subsequently vacated by this Court based on a decision on appeal in this action or in the parallel
criminal action titled United States v. Rajaratnam, 09 CR t 184 (RJH), Defendanl's joint and
several obligation shall be vacated to the same extent.
4.

Defendant agrees that it shall not seek or accept. directly or indirectly.

reinibursement or indemnification from any source, including but not limited to payment made
pursuant to any insurance policy, with regard to any civil penalty amounts that Defendant pays
putsuant to the Final Consent Judgment. regardless of whether such penalty amounts or any part

thereof are added to a distribution fund or otherwise used for the benefit of investors.
Defendant further agrees that it shall not claim, assert, or apply for a tax deduction or tax credit
with regard. to any federal, state, or local tax for any penalty amounts that Defendant pays
pursuant to the Final Consent Judgment, regardless of whether such penalty amounts or any part
thereof are. added toa d~tribution fund or otherwise used for the benefit of investors.
5.

Defendant waives the entry offindings offaet and conclusions of law pursuant to

Rule 5Z of the Federal RU.les ofCivil Procedure.
6.

Defendant waives the right, if any, to a jl,lI'}' trial and to appeal from the entry of

the Final Consent judgment.

7.

Defendant enters into this Consent voluntarily and represents that no threats,

offers, promises, or inducements af any kind have been made by the Commission or any
member, officer, employee, agent, or representative of the Comtnission to induce Defendant to
enter into this Consent.

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8.

Defendant agrees that this Consent shall be incorporated into the Final Consent

Judgment with the same force and effect as if fully set forth tht:rein.
9.

Defendant will not oppose the enforcement of the Final Consent Judgment on the

ground, if any exists, that it. fails to comply with Rule 6S(d) of the Federal Rules of Civil
Procedure, and hereby waives any objection based thereon.
10.

Defendant waives service of the Final Consent Judgment and agrees that entry of

the Final Consent Judgment by the Court and filing with the Clerk oIthe Court will constitUte
notiee to Defendant of its terms and conditions. Defimdant further agrees to provide counsel for
the Comtnission, within thirty days after the Final Consent Judgment is filed with the Clerk of
the Court. with an affidavit or declaration stating that Defendant has received andrea.d a copy of
the Final Consent Judgment.
11.

Consistent with 17 C.F.R. 202.5(f), this Consent resolves only the claims asserted

against Defendant in this civil proceeding. Defendant acknowledges that no promise or
representation has been illade by the Commission or any member, officer. employee, agent. or
representative of the Commission with regsrd to any criminal liability that may have arisen or
may arise from the facts underlying this action or immunity from any such criminal liability.
Defendant waives any claim of Double Jeopardy based upon the settlement of this proceeding,
including the imposition of any remedy or civil penalty herein. Defendant further acknowledges
that the Court's entry of a pennanent injunction inay have coUateral consequences WIder federal
or state law and the rules and regulations ofself-regulatory organizations, licensing boards. and
other regulatory organizations. Such collateral consequences include, but are not limited to, a
statutory diSqualification with respeot to membersh~p or participation in, or association with a
member of, a self-regulatory organization. This statutory disqualification has consequences that

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are separate from any sanction,imposed in an administrative proceeding. In addition, in any
disciplinary proceeding before the Commission based on the entry of the injunction in this
action, Defendant understands that it shall not be permitted to contest the factual allegations of
the complaint in this action.
12.

Defendant understands and agrees to comply with the Commission's policy "not

topertnit a defendant or respondent to consent to a judgment or order that imposes a sanction
while denying the allegations in the compiaintor order for proceedings." 17 C.P.R. § 202.5. In
compliance with this policy• Defendant agrees: (i) not to take any action or to make or permit to
be.'made any public statement denying, directly or indirectly, any allegation in the complaint or
creating the impression that the complaint is without factual basis; and (ii) that upon the filing of
this Consent, Defendant hereby withdraws any papers filed in this action to the extent that they

deny any allegation in the complaint. If Defendant breaches this agreemC!:nt. the Commission
may petition the Court to vacate the Final Consent Judgment and restore this action to its active
docket. Nothing in this paragraph affects Defendant's: (i) testimonial obligations; or (ii) right to
take legal or factual positions in litigation or other legal proceedings in which the Commission is
not a party.
13.

Defendant hereby waives any rights under the Equal Access to Justice Act, the

Small Business Regulatory Enforcement Fairness Act of 1996. or any other provision oflaw to
seek from the United States, or any agency, Or any official of the United States acting in his or
her official capacity, directly or indirectly, reimbursement of attorney's fees or other fees,
expenses, or costs expended by Defendant to defend against this action. For these purposes,
Defendant agrees that Defendant is not the prevailing party in this action since the parties have
reached a good faith settlement.

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14.

Defendant agrees that the Commission may present the Final Consent Judgment

to the Court for signat}Jre and entry without further notice.
15.

Defendant agrees that this Court shall retain jurisdiction over this matter for the

purpose of enforcing the tezm.s of the Final Consent Judgment.

&""CtI" L~
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Galleon Mana..
By;

GeorgeLau ~

Consultant and Duly Authorized Signatory

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Conunission expires:

Approved as to fonn:

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Shearman &. Sterling LLP

599 Lexington Ave.

New York, NY 10022

Attorneys fot Defendant

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