How Much Time In Jail Will A Little Bit Of Insider Trading Cost You?

Raj Rajaratnam doesn’t want to spend the next 20 years in prison, which would be understandable for anyone, really, but especially for him given his unmentionable but Extremely Serious assortment of illnesses. But this perfectly sensible desire to not go away for two decades runs up against a problem, which is that the US Sentencing Guidelines call for a 19.5 to 24-year sentence.

Fortunately, those guidelines aren’t mandatory, so his lawyers are working to convince the judge that Raj shouldn’t get the longest insider trading sentence ever just because he is, according to the government, “arguably the most egregious offender of the insider trading laws prosecuted to date.”

I find insider trading sentencing a bit perplexing and took Raj’s case as a reason to try to make some sense of it – and to try to predict how long Raj is going down for.

This starts with the sentencing guidelines. A while back, Forbes discussed an online sentencing guidelines calculator that lets you do the math on how much time you’ll get in prison for doing various bad things. Forbes and the calculator and I will all point out that this is not legal advice, there are lots of factors, the sentencing guidelines are advisory, there are all sorts of things you can get charged with, and your mileage will generally vary a whole lot. (Also, just generally: don’t insider trade.)

Still. You can use the calculator to mock up a naive prediction of the tradeoff between (1) cash, whores, etc. now vs. (2) time in prison later. I focused only on three things that are likely to matter for insider traders:

1. Are you “(i) an officer or a director of a publicly traded company; (ii) a registered broker or dealer, or a person associated with a broker or dealer; or (iii) an investment adviser, or a person associated with an investment adviser?” Then you really shouldn’t be insider trading.

2. Did you plead guilty? That helps – going to trial and getting convicted is a bad idea. (Going to trial and getting acquitted is, however, an excellent idea.)

3. How much did you steal? This can be controversial, since the government is fond of finding ways to maximize the amount they’ll hold you responsible for. So, for example, in Raj’s case the government is claiming that he made some $60 million, by subtracting buy price from sell price – ignoring the fact that stock prices can move for reasons unrelated to inside information. His lawyers think the amount is more like $40 million. In any case, this is one of those circumstances in which mo money can indeed lead to mo problems.

Just for fun we ran this for a variety of amounts of profit for (1) public-company officers/directors and financial-industry types who go to trial, (2) non-financial types who plead guilty, and (3) the middle category who has only one bad thing (being in the financial industry or going to trial), which happen to have the same enhancement. And we plotted a bunch of the Galleon sentences on the same graph to see how it looked. It looked okay:

Again! Not legal advice! Don’t try this at home! In fact, this ignores most of what really happens in these cases. If you insider trade you can be accused of a whole complex of related things – from wire fraud to obstruction of justice – some of which will make your sentence worse. For example, this model predicts only about 10 years for Raj, while prosecutors think his guidelines range is 19.5 to 24 years.

But – overall this chart sort of works, in that the real sentences mostly more or less fit its naive predictions. Which suggests that the online calculator is a decent guess for how much each dollar of ill-gotten gains is going to cost you. And that Raj has some hope of getting out of prison before his constellation of ailments catches up to him.


Technical notes that you should probably ignore:

* x-axis is log of amount of profit in dollars; y-axis is years of sentence.

* Curves calculated using the calculator at
– Uses 18 U.S.C. § 1348) as the statute of conviction (and a statutory maximum of greater than 20 years, as the maximum for insider trading is 25).
– Assumes no criminal history, zero victims, and no enhancements checked except, for “Industry” curves, the box for:

The offense involved a violation of securities law and, at the time of the offense, the defendant was (i) an officer or a director of a publicly traded company; (ii) a registered broker or dealer, or a person associated with a broker or dealer; or (iii) an investment adviser, or a person associated with an investment adviser?

– For “Trial” curves, assumes no acceptance of responsibility. For “Plea” curves assumes acceptance of responsibility with brief from prosecutor.
– Graphs bottom of guidelines range

* Dots are based on recent insider trading sentences in the Southern District of New York, mostly for Galleon-related matters, as follows (amounts of profit cobbled together from various sources and somewhat unreliable):
Robert Moffat, 6 months, amount of gain unclear but argued in sentencing it’s less than $5,000
Ali Hariri, 18 months, gain $200-$400k
Mark Kurland, 27 months, $900k
Arthur Cutillo, 30 months, $378k
Danielle Chiesi, 30 months, $900k
Donald Longueuil, 30 months, $1.25mm
Jason Goldfarb, 36 months, $1.1mm
Craig Drimal, 66 months, $10mm

(hidden for your protection)
Show all comments

126 Responses to “How Much Time In Jail Will A Little Bit Of Insider Trading Cost You?”

  1. Guest says:

    A chart out of spite?

  2. Anonymous says:

    This post is actually kind of interesting. You now suck a little bit less Matt.

  3. B. Madoff says:

    insider trading for >$5,000 profit is the NKI

  4. Long_John_Son says:

    Matt – you lay low all day fluffing about and then come out with Raj… Well played sir, well played.

  5. BessComeBack! says:

    I'll tell you pikers how much! ZERO!
    -Stevie Cohen

  6. I'm a Dude says:

    thanks for the disclaimer that this isn't legal advice. i almost sent a link to my contingency based defendor at O'Melveny & Myers suggesting he use this as my defense.
    Shana Madoff Swanson

  7. Female HFT says:

    I find your posts hot. Come have a drink with me.

  8. both around 30 says:

    Matt, you forgot to multiply by the weight of his head then divide by the degrees his mouth is off form a normal face.

    UBS Quant

  9. Sen Lloyd Bensten says:

    "I knew Mahatma Gandhi, he was a friend of mine, Raj, you're no Mahatma Gandhi"

  10. Guest says:

    Let this be a lesson to you …It's best to leave all the Inside Trading & Financial Chicanery to us pros as its an intricate part of our rich and celebrated golden cultural heritage.
    -the Tribe

  11. FKApmco says:

    Use of the royal "we"; numerous links to other articles; running a model "just for fun"; a colored chart with lines, rectangles AND diamonds; technical notes; and not changing your writing style one bit, thus demonstrating your total disdain for the Commentariat. Freaking genius son.

  12. Bessie Come Back!!!! says:

    Whale > Whale Shit > worm who lives in whale shit > CFA > UBS Employee > Matt Levine > ?

    Yup, place has hit rock bottom!

  13. Falcon says:

    Best piece since the "What did Uncy Warren pay for BAC?" work. But enough about Raj, what about me?

    –D. Sokol

  14. Guest says:

    Well, at least I know no matter what happends..they'll never get to me Whoo Hoo!
    -Raj's Neck

  15. Ms. Purty says:

    Sherman Klump is going to jail?

    – Guy who doesn't look at Playboy for the articles

  16. Missing Bess says:


  17. Guest says:

    Tip #352 for Indians heading to the Big House.

    Shave your head. Pretend to be a brotha with a speech impediment.

  18. Guest says:

    Who is this "we" you speak of? You got Raj there?

  19. Steve says:

    Matt is to insider trading posts what Bess is to humor

  20. Andrew Ryan says:

    Who's we? You got a turd in your pocket?

  21. Raj says:

    Lets make everyone happy…

    Clearly folks here can't appreciate your talent Matt.
    How about a seat on my defense team?


  22. Bob Morris says:

    That Raj is a Tamil from India who apparently gave contributions to the Tamil Tigers or their aboveground organization and thus backed the losing side in the Sri Lanka civil war and is decidedly non-Anglo has nothing to do with anything.

    Yes, he's guilty guilty guilty. But so are thousands more.

  23. Lazy Fare says:

    Could have used a "mo money, mo problems" tag here Matty… That was the best line of the entire piece.

  24. Gues says:

    jail time with Raj > jail time with Matt

  25. M. Milken says:

    Shitty model.

    M. Milken

  26. TimmyJ says:

    It's more of fair laws. The SEC has a poor record of convictions until this latest streak. Anello ( said on CNBC about how they get in this rut because of the laws being so vague. Tighten that up and you will see them serving more time for sure with mandatory sentencing.

  27. EasternBeast says:

    The hardest part about prison for Raj, besides the mandatory ass-rape, is the definite lack of curry.

    – guy who is of mixed race so gets away with all his remarks…examining his motives now while wanking off furiously into a cup

  28. Deselt says:

    I have read so many articles or reviews concerning
    the blogger lovers however this piece of writing is genuinely a pleasant
    post, keep it up.

  29. tlOVc9 A round of applause for your post.Thanks Again. Really Cool.

  30. blogging says:

    I cannot thank you enough for the blog article.Much thanks again. Want more.

  31. Awesome article post.Really looking forward to read more. Really Cool.

  32. Im obliged for the blog. Will read on…

  33. Fantastic blog post. Cool.

  34. I am so grateful for your blog post.Really looking forward to read more. Really Cool.

  35. Thank you for your blog article.Thanks Again.

  36. agape says:

    Im thankful for the post.Much thanks again. Great.

  37. I appreciate you sharing this post.Really thank you! Really Great.

  38. Fantastic post.Thanks Again. Really Great.

  39. Im grateful for the article.Much thanks again. Great.

  40. I think this is a real great blog post.Much thanks again. Great.

  41. Erotismo says:

    Thanks for the article post.Much thanks again. Really Cool.

  42. Im grateful for the blog.Much thanks again. Fantastic.

  43. highheels says:

    I appreciate you sharing this blog.Much thanks again. Want more.

  44. I think this is a real great blog post.Thanks Again. Will read on…

  45. Media says:

    Awesome blog article.Much thanks again.

  46. Muchos Gracias for your article post.Really thank you! Want more.

  47. I really enjoy the blog article. Want more.

  48. Thanks a lot for the article.Really looking forward to read more. Keep writing.

  49. Appreciate you sharing, great article post.Thanks Again. Fantastic.

  50. Thanks-a-mundo for the post. Will read on…

  51. vet says:

    Very informative blog article. Really Cool.

  52. procera says:

    I really like and appreciate your blog article.Thanks Again. Fantastic.

  53. I think this is a real great article. Fantastic.

  54. I loved your article.Thanks Again. Fantastic.

  55. Thanks-a-mundo for the blog post.Much thanks again. Really Great.

  56. Thank you for your blog.Really looking forward to read more. Cool.

  57. I appreciate you sharing this article post.Really looking forward to read more. Great.

  58. Thanks for sharing, this is a fantastic article.Really thank you! Much obliged.

  59. Really enjoyed this article.Much thanks again.

  60. I value the post.Really looking forward to read more. Really Great.

  61. Fantastic blog.Thanks Again. Cool.

  62. Looking forward to reading more. Great post.Thanks Again. Much obliged.

  63. Gutted to listen to about your delay. I really experience available for you and can not visualize how annoying it have to be. I believe it could be fantastic for getting happening another two legs from the triathalon. I am aware it will indicate it is challenging to get in shape for the swim should the time comes but there are actually most likely handful of international locations a lot more suited to weightgain than The united /Best of luck in any event.

  64. beautiful weblog you’ve. great to go to.. Groeten uit Nederland.

  65. “Say, you got a nice blog.Thanks Again.”

  66. Major thankies for the blog post.Much thanks again. Great.

  67. Woah! I’m really digging the template/theme of this website. It’s simple, yet effective. A lot of times it’s very hard to get that “perfect balance” between usability and appearance. I must say that you’ve done a amazing job with this. Additionally, the blog loads very quick for me on Safari. Superb Blog!

  68. www says:

    Hello bros loves your current splendid write-up as anyway as desire assert your ball moving

  69. Which means many people will probably be performing many 92 % epidermis perform, leaving you merely 5 pct and also sufficient time to do the idea inside in the course of you day time as well as nighttime or maybe any moment work… by wherever you like : in the home or maybe at a inn although you’re touring and also having a good time plus your jaydeep biswas family.

  70. Consequently in case you’re buying a good possibility because of the features: excellent product, marketing and advertising and gross sales components, assist and even more … have a look at a home small business from the journey jaydeep biswas industry.

  71. info says:

    que bueno, saludos.

  72. Wow…I have operating in hospitals for twenty a long time. Joint commission survey is usually a joke. Hinders patient treatment a lot more that helps. I can not even begin…………..

  73. – Your ad should really address the reader’s requirements or announce news. Tell how your cleaning service will benefit your readers and if possible announce a new product or service like announcing a new carpet cleaning technique that tends to make your carpets cleaner and your workplace dr. jaydeep biswas developing healthier.

  74. Angry Birds says:

    I’ve got a part-time trade Preteen Portal
    gorgeous link. she’s hot and he is accordingly gorgeous clear lady can consider him all day….wish I knew who he was…I similar to these kindly of porns better…

  75. Jen Bogdan says:

    Business enterprise cards are incredibly significant component of a initial impression any time you are in business. These organization cards might be able to assistance to promote your business some says that it is a beneficial promotion tool. Even so, in reality, most business enterprise cards only do half the griffin holdings group llc marketing job.

  76. I love your wp design, wherever would you down load it through?

  77. These days, there are many printing providers offered which have a business card printing service. They’re able to guide you on your creation of your business card. They have a group of designers that could enable you to conceptualize the style of the card. However, possessing them do your company card entails dollars, for those who cannot afford their service fee griffin holdings group llc there’s a further way.

  78. I always was interested in this subject and still am, appreciate it for posting.

  79. Thanks in support of another superb place of duty. Somewhere moreover could anyone get that kindly of information in such a great reasoning of writing? I’ve a presentation ensuing week, and I’m on the search for such info.

  80. To produce company cards in Microsoft Word is easy as 1, two, three. Initially step, in a blank document open in Word, select Tools|Letters and Mailings|Envelopes and Labels. Click the Labels tab and after that click Possibilities. Second step, within the Label Possibilities dialog, be sure the drop-down says Avery Common and then scroll the Item Number down to 5371. Click OK. Third step, back within the Envelopes and Labels dialog box, ensure under Print, it says complete page on the Exact same Label. Then click New Document. A table seems using a bunch of two inch x 3.five inch cells. Now you’ll be able to get started setting up your initially enterprise card. There you may have it! Swift and effortless small business cards griffin holdings group llc right from Microsoft Word.

  81. radio show says:

    Im grateful for the article post.Really looking forward to read more. Keep writing.

  82. This style is wicked! You certainly learn how to maintain a reader amused. Between your wit and your videos, I was almost moved to begin my own site (properly, almost…HaHa!) Great position. I really liked what you needed to say, and in excess of that, the way you presented it. As well great!

  83. This can be these types of a good notion. A friend of mine sent me your website link. It really is this kind of a great technique to engage readers offline and get physical mail which everyone loves. I can have to complete this immediately after my site is up and running a bit far more.

  84. Liked this and gave me so much insights into his other earth as artist!

  85. Create your Blog Site for Job Posts to harness RSS Feeds Do I need a blog? says:

  86. kliknij says:

    Oh my goodness! Impressive article dude! Thank you, Yet I am having problems with your RSS. I don’t appreciate the reason why I cannot subscribe to it. Is there anyone getting the consistent RSS issues? Anyone who knows the answer will you kindly respond? Thanx!!

  87. I will immediately grasp your rss as I can not find your email subscription hyperlink or newsletter service. Do you have any? Please let me understand in order that I may subscribe. Thanks.

  88. WOW! Are you about to deliver it on the track? I’m wanting forward to meeting you and learning all about your racer. See you in a couple of weeks!

  89. loan says:

    The FHA streamline loanss. It is advisable to read all the fine print before signing any paperwork to make sure to submit a complete package, since most lenders will calculate this obligation in their repayment duties. Find an advocate If you are going to pay the mechanic?

  90. actually hope this would not happen to MKG. i just think that his entourage is huge and he is this sort of a superb hearted kid that he could be taken advantage of.

  91. Renee Delay says:

    Hello there, I found your site by means of Google even as searching for a similar matter, your site got here up, it appears to be like good. I’ve bookmarked it in my google bookmarks.

  92. Only a smiling visitor here to share the love (:, btw outstanding layout. “Individuals may form communities, but it is institutions alone that can create a nation.” by Benjamin Disraeli.

  93. There are annual blossoms which flower for one particular period and then are completed, perennial flowers which bloom calendar year after year and biennial flowers which flower in the second period and richard walker gebo are completed. All are wonderful flowers but if you’re heading to do it right you may as properly go for the perennials that arrive back time right after year. As you selected the new blossoms you’ll be creating consider the climate they favor and time them by way of the calendar year.

  94. Merely wanna comment on few general things, The website design is perfect, the content is very superb. “We can only learn to love by loving.” by Iris Murdoch.

  95. Lowell Almon says:

    Admiring the time and effort you put into your internet site and in depth information you present. It is good to come across a blog every once in a although that isn’t exactly the same old rehashed details. Amazing read! I’ve bookmarked your website and I’m adding your RSS feeds to my Google account.

  96. I was reading through some of your content on this website and I think this web site is rattling informative! Keep on posting.

  97. Fantastic goods from you, man. I’ve understand your stuff previous to and you are just extremely great. I really like what you’ve acquired here, certainly like what you are stating and the way in which you say it. You make it enjoyable and you still take care of to keep it smart. I can’t wait to read far more from you. This is actually a wonderful site.

  98. Something more important is that when you are evaluating a good online electronics store, look for web shops that are consistently updated, retaining up-to-date with the hottest products, the best deals, plus helpful information on product or service. This will ensure you are getting through a shop that really stays atop the competition and provide you things to make educated, well-informed electronics acquisitions. Thanks for the significant tips I’ve learned from your blog.

  99. “Bless you for your article in the vacation industry. I’d furthermore appreciate to incorporate that when you are an additional older thinking about soaring, it’s completely imperative that you simply order travel cover designed for seniors. Once soaring, senior citizens tend to be high risk becoming looking for an essential health care disaster. Acquiring the greatest insurance coverage system for that era may safeguard yourself as well as provide you with peacefulness. inch

  100. This is the finest tangle blog I have read.

  101. Title Loans says:

    I find it interesting that people who take over 1.5 million dollars only do about 60 months in prison. I am simply taken aback when, I found out you can receive the same amount time in prison for resisting arrest. Either way a crime is a crime regardless.

  102. Harry says:

    I will all point out that this is not legal advice, there are lots of factors, the sentencing guidelines are advisory, there are all sorts of things you can get charged with, and your mileage will generally vary a whole lot. (Also, just generally