Anil Kumar's 'Extraordinary' Help With Raj Case Gets Him Off With Two Years Probation

anil kumar galleon mckinsey

Former McKinsey & Co. partner Anil Kumar was sentenced to two years’ probation for insider-trading crimes in light of what prosecutors called his “extraordinary” cooperation in the trials of Raj Rajaratnam and Rajat Gupta.

U.S. Circuit Judge Denny Chin in Manhattan today declined to send Kumar to prison, noting that he was a key witness in what the government has called the biggest insider-trading cases in U.S. history.

Chin also ordered Kumar, 53, to pay a $25,000 fine and forfeit $2.26 million.

“I am persuaded that this was aberrational conduct and that Mr. Kumar has led a law-abiding and productive life,” Chin said. “I am persuaded he cooperated not to get a lighter sentence but to make amends for what he did.”

Kumar testified at the trials of Rajaratnam, the co-founder of hedge-fund company Galleon Group LLC, and Gupta, the former Goldman Sachs Group Inc. director who once led McKinsey. Both men were convicted of securities fraud and other crimes.

Kumar, who worked at McKinsey from 1986 to November 2009, pleaded guilty in January 2010 to one count each of conspiracy and securities fraud. At Rajaratnam’s trial last year, he said he passed inside information about client matters, including Advanced Micro Devices Inc.’s deal to sell chips to Hewlett- Packard Co. and AMD’s acquisition of ATI Technologies Inc.

‘Totally Shamed’

“I stand in this court today completely and totally shamed by the conduct that has brought me before your honour,” Kumar said at the sentencing hearing. “It has brought me pain and suffering, and dishonor to my family, my friends and my business colleagues. I strayed from my core beliefs that I stood for my entire life.”

Rajaratnam is serving an 11-year prison sentence at a federal facility in Massachusetts. Gupta is scheduled for sentencing in October. Under the statutes, Kumar faced as long as five years in prison for conspiracy and 20 years for securities fraud.

Kumar led a “law-abiding life” until he was pulled into the insider-trading scheme with Rajaratnam, defence lawyer Greg Morvillo said yesterday in a court filing. Prosecutors praised Kumar’s “extraordinary” cooperation with their investigations.

Kumar testified in June that Gupta approached him in 2006 saying he wanted to start an investment fund after his scheduled retirement from McKinsey in 2007. Kumar said Gupta sought out Rajaratnam, Kumar’s classmate at the University of Pennsylvania’s Wharton School, because of his expertise as a prominent hedge-fund manager.

The case is U.S. v. Kumar, 10-cr-00013, U.S. District Court, Southern District of New York (Manhattan).

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