Ali Hariri, the former Vice President of Atheros Communications, a network chip firm based in California, received an 18 month stint behind bars for his role in what is considered the biggest case of hedge fund insider trading in history.
Hariri was lucky, however, as a two-year sentence was the recommended penalty under federal guidelines. Despite the leaner sentence, US District Judge Richard J. Holwell was strongly condemnatory of Hariri’s actions, stating that prison was necessary for people like this, due to “the risk to a fair marketplace of this type of behaviour”.
Hariri’s lawyers asked for a sentence below the two year recommendation, citing the fact that he did not profit directly from the illegal trades and that his reputation is now tarnished, making it impossible for him to ever work as an executive in a technology firm again.
Hariri might have been keen to talk before when giving insider trading tips, but his response to the sentence was stony silence – probably due to still being in shock at having being caught.
Hariri is one of 21 people brought up on charges of fraud a year ago in the insider trading fiasco, but several others have yet to be convicted.
One of the key people involved in the scandal is Raj Rajaratnam, founder of the Galleon Group, who managed to get out on bail with a $100 million payout, which is indicative of just how wealthy he really is. He claims his trades were based on public knowledge, but that’s unlikely to wash with the courts.
Robert Moffat, the IBM executive who was tipped to take the top job as CEO, was another of the high-profile fraudsters, but what made his case more intriguing was an added layer of sex. He was involved in a lurid affair with Danielle Chisei, who received insider tips for a little something in return. Moffat received a $50,000 fine and six months in jail.
In a statement to the court Hariri said he was “truly sorry” for what he did and that he will regret it for the rest of his life. It’s funny how a prison sentence changes people’s perspectives like that.