Appeals Court Stays Rajaratnam Wiretap Order

Feb 12 2010 | 5:41am ET

The Securities and Exchange Commission won’t be getting its hands on Raj Rajaratnam’s wiretaps just yet.

A federal appeals court granted the Galleon Group founder, who has been charged with masterminding the a $50 million insider-trading circle, a temporary stay of a lower court ruling that ordered him to turn over some 15,000 wiretap intercepts at the heart of the criminal case against him and his co-defendant, Danielle Chiesi. The judge overseeing the SEC’s civil case, U.S. District Judge Jed Rakoff, ordered Rajaratnam and Chiesi to turn over the wiretaps by Monday.

Rajaratnam and Chiesi received the wiretaps as part of discovery in the criminal insider-trading case against them. The two have argued that the SEC does not have the authority to obtain the wiretaps. Their lawyers have also announced that they will challenge the legality of the wiretaps for use in the criminal case.

A three-judge panel of the U.S. Court of Appeals for the Second Circuit in New York will consider the order to turn over the wiretaps. No date has been set for the hearing; the civil case is set to go to trial on Aug. 2.

“We are very pleased that this serious issue will get the court’s full consideration,” John Dowd, a lawyer for Rajaratnam, said.

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