SEC, Rajaratnam Battle Over Wiretap Order

Mar 23 2010 | 6:19pm ET

Lawyers for the Securities and Exchange Commission and two Galleon Group insider-trading defendants battled today over the wiretaps at the center of the case.

The Second Circuit Court of Appeals in New York heard arguments from both sides over whether Galleon founder Raj Rajaratnam and former New Castle Partners executive Danielle Chiesi should be forced to turn over the taps—which they received from the prosecutors as part of the criminal case against the two—to the SEC. But the judges on the appeals panel seemed more interested in whether the taps would be admissible in either the criminal or civil case.

“I would think everybody’s energies should be devoted to getting a quick resolution on the legality of the wiretaps,” U.S. Circuit Judge Reena Raggi said during today’s hearing. Rajaratnam’s lawyer, Patricia Ann Millett, later explained that, while she believes “there are false, misleading omissions and misrepresentations” in the government documents seeking the wiretaps, the defense is still wading through the 18,000 tapes.

The SEC’s civil case against Rajaratnam and Chiesi is set to go to trial on Aug. 2. The criminal trial is scheduled to begin on Oct. 25. Rajaratnam faces up to 185 years in prison if convicted for his role in the largest insider-trading case in U.S. history. Chiesi faces up to 155 years.

Even if the wiretaps are eventually deemed admissible, the defendants say they should not have to hand them over to the SEC, as the judge overseeing the civil case, U.S. District Judge Jed Rakoff, ordered last month.

Rakoff’s order would force “two defendants in a pending criminal action to disclose in civil discovery almost 20,000 sealed, untested wiretaps of their own private telephone conversations,” lawyers for Rajaratnam and Chiesi wrote to the court. “That order contravenes the plain text of the wiretap statute.”

Thomas Karr, a lawyer for the SEC, said the fast-approaching civil trial makes access to the wiretaps “a matter of necessity.” But he conceded that, should the taps be suppressed, “it is obviously a different situation.”


In Depth

Q&A: Neil Azous Talks Global Macro Investing

Nov 24 2014 | 12:41pm ET

Neil Azous is the founder and managing member of Rareview Macro, an advisory firm...

Lifestyle

Scene Last Night: Clinton, Schwarzman, Corzine, Neidich, Diamond

Nov 25 2014 | 5:52pm ET

Steve Schwarzman had a granddaughter yesterday morning. Last night he sat one table...

Guest Contributor

Why The Big Money Is Going To Europe

Nov 14 2014 | 6:03am ET

Peer-to-peer lending was invented with the individual investor in mind. But despite...

 

Sponsored Content

    For Hedge Funds, Mastering Data Is Key To Success

    Nov 4 2014 | 9:45am ET

    Data management is important to every business, but for hedge funds, it is critical. FINalternatives recently asked Peter Sanchez, CEO of Northern Trust Hedge Fund Services, how fund managers can deal with the demands of managing data while at the same time remain transparent and abide by operational best practices. Read more…

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

November 2014 Cover

Building a better market

Reg NMS created a huge bifurcation in equity markets and while much of what has followed has been positive, in terms of lower fees and greater liquidity, many traders would like to see the market come...

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.