Federal prosecutors want to send convicted hedge fund chief Raj Rajaratnam to prison for as long as 24 years, which would be the longest insider trading sentence in history, says the New York Times. What a judge decides next week is being seen in legal circles as a litmus test of whether the crime of insider trading justifies such a long prison term.m “Given the magnitude of the crimes, it's hard to feel any pity for him,” said Harlan Protass, a defense lawyer who teaches at the Benjamin N. Cardozo School of Law. “Still, there is a real question whether such a lengthy sentence is warranted for an insider trading offender.”
Sentences for white-collar criminals used to be relatively lenient. This began to change in the late 1980s. The insider trading scandals and savings and loan crisis of that era resulted in increased sentences for corporate defendants. In 1987, the U.S. Sentencing Commission issued guidelines that linked prison terms to the amount of loss in fraud cases. “Since the inception of the sentencing guidelines, we have seen a consistent and dramatic upward ratchet,” said James Felman, a lawyer in Tampa and co-chairman of the American Bar Association's sentencing committee. Today, prison terms measured in decades are common for white-collar criminals.