Despite being one of the longest white collar crime sentences in history, the verdict was seen as a victory for the defence team, with prosecutors pushing for jail time of up to 25 years.
US judge Richard Holwell said Rajaratnam’s crimes “reflect a virus in our business culture that needs to be eradicated”. He is believed to have made more than $72m (£45.8m) by using illegal tips to trade stocks in firms including Google, Goldman Sachs and Intel.
Self-made tycoon Rajaratnam is now likely to spend the next decade in the company of Ponzi scheme fraudster Bernard Madoff at the Butner prison in North Carolina.
The relatively light sentence was met with disbelief by experts, who believed his lack of remorse – Rajaratnam said he did not understand why he was convicted – would count against him.
His frail health, including “advanced diabetes”, was taken into account by the judge. The 54-year-old was also ordered to pay a fine of $10m.
The case against the Galleon co-founder involved a sprawling investigation that utilised the widespread use of wiretaps to snare its target.
The sentence is the longest handed down for insider dealing alone, although former Enron president Jeffrey Skilling was given 24 years in a case that included some insider trading charges. Former ImClone boss Samuel Waksal was sentenced to more than seven years and fined $3m for selling shares based on sensitive information.
Wall Street Journal writer R Foster Winans served 18 months in 1985 for giving out information on stocks he then wrote about for the newspaper.
Sentences for insider dealing have generally been shorter than in high-profile rogue trader cases, with Nick Leeson, who brought down Barings Bank, serving six and a half years and Sumitomo Corporation copper trader Yasuo Hamanaka being slapped with an eight-year stretch.
But they are all dwarfed by the 150-year sentence given to Madoff for his Ponzi scheme, which stole billions from thousands of victims.
Simon Hart, an enforcement specialist at law firm Reed Smith said it is unlikely the UK would have been able to prosecute a case like Rajaratnam’s as the Financial Services Authority is not permitted to use wiretap evidence.