Rajaratnam, who is currently serving the longest prison term ever given for insider trading, will be writing the US government the big check to settle a civil case brought by the Securities and Exchange Commission.
Reportedly the US federal judge approved the deal on Thursday.
The settlement includes 1.29 million dollars representing profits gained and losses avoided as a result of trading on tips from former Goldman Sachs Group Inc. director Rajat Gupta, who was convicted separately in June.
It also includes 147,738 dollars in prejudgment interest, the report said.
Rajaratnam, founder of the Galleon Group of hedge funds, is serving 11 years at a Massachusetts federal prison, and has appealed.