Ex-analyst Ordered to Pay $34.5M in SEC Case
August 24, 2011 (Associated Press) WASHINGTON - A federal judge has ordered a former Moody's Investors Service analyst to pay $34.5 million after he fled the country to avoid facing insider-trader charges.
U.S. District Judge Jed Rakoff in Manhattan issued the order Tuesday against Deep Shah in the Securities and Exchange Commission's civil case. Government officials filed criminal and civil insider-trading charges against Shah in 2009.
The government has said that Shah received money for giving confidential information on company acquisitions to a leading figure in the Galleon case, the largest hedge fund insider-trading investigation in history.
Shah hasn't responded to the suit and is believed to be in India, the SEC said. He was ordered to pay a $24.6 million fine and $9.9 million in restitution plus interest.
SEC spokesman John Nester said Wednesday that the agency was pleased with the judge's order.
Shah, who was a hotel industry analyst for Moody's in New York, was accused of passing tips about acquisitions on to Roomy Khan, a Florida investor who pleaded guilty in 2009 to criminal conspiracy and securities fraud charges. Khan has been cooperating with the government's investigation.
Shah received cash from Khan and others in exchange for confidential information, the government says.
The Galleon case accused hedge fund managers and other investors of conspiring to trade on nonpublic company information to net more than $50 million in illegal profits.
Raj Rajaratnam, the billionaire founder of the Galleon Group hedge fund, was convicted in May of insider trading and conspiracy. Prosecutors have recommended a maximum term of 24 1/2 years when he is sentenced next month.
The probe has resulted in more than two dozen arrests and 21 guilty pleas. It also has led to a second investigation into industry consultants who pass along inside information as the product of legitimate research.