SEC Got Galleon Wiretaps By Mistake

Feb 3 2010 | 2:08pm ET

Federal prosecutors mistakenly sent some of the wiretaps at the heart of the Galleon Group insider-trading case to the Securities and Exchange Commission, the regulator and the U.S. Attorney’s office acknowledged.

The SEC, which has asked a judge to allow it to use the wiretap evidence in its civil case against the alleged Galleon conspirators, said it had not listened to the tapes and had returned them to prosecutors. But lawyers for Galleon founder Raj Rajaratnam and former Galleon employee Zvi Goffer demanded that the SEC be barred from using the evidence and demanded a hearing on the disclosure.

U.S. District Judge Jed Rakoff is expected to rule on the matter this week.

Cynthia Monaco, Goffer’s lawyer, claims prosecutors blind copied the SEC on documents being disclosed to defendants. The U.S. Attorney’s office denies doing so.

“They have already violated the dealing and disclosure requirements of Title III and are seeking an alternative means to justify production,” she wrote to the judge.

Lawyers for the defendants in the SEC case were already trying to get the wiretap evidence banned from both the criminal and civil cases, arguing that they were unlawfully obtained. The defense has also argued that the SEC cannot use wiretaps because it is not a law enforcement agency.

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