Rajaratnam Complaints Win Probes Into Potential Leaks

May 26 2010 | 11:20am ET

The U.S. Department of Justice and the Securities and Exchange Commission have launched investigations into possible leaks about the Galleon Group insider-trading case after Galleon founder Raj Rajaratnam’s lawyer complained that his client was being subjected to “trial by newspaper.”

John Dowd wrote to both the Justice Dept. and SEC last month blasting the “pervasive and continuing pattern of unconstitutional conduct by attorneys and others” working for the U.S. Attorney’s Office in Manhattan, the Federal Bureau of Investigation and the SEC. In response, both the Justice Dept. and SEC have told Dowd that they will look into his allegations.

“The SEC inspector general, David Kotz, phoned Mr. Dowd’s office earlier this month and indicated that he would look into the matter as part of his broader investigation into SEC media leaks,” Jim McCarthy, a Rajaratnam spokesman, said in a statement. “On May 11, the Office of Professional Responsibility at DOJ wrote a letter to Mr. Dowd to say that they too ‘have initiated an inquiry into the allegations.’”

In his April 20 letter, Dowd took issue with the press-friendly nature of the prosecution and SEC in the case, specifically complaining about press releases and televised press conferences, disclosing the contents of some of the thousands of wiretap intercepts at the heart of the case, which have been sealed by the court, and “anonymously leaking detailed information about its investigation, including the identities of unindicted alleged co-conspirators.”

Dowd said that those actions have imperiled Rajaratnam’s right to an impartial trial.

Rajaratnam and 20 others have been accused in the sprawling insider-trading case, the largest in U.S. history. Both Rajaratnam and his co-defendant, Danielle Chiesi, face more than a century behind bars if convicted of the charges against them.

Dowd posted the letters, as well as extensive criticism of the media coverage of the case, on a Web site for the Rajaratnam defense team, www.rajdefense.com. On the Web site, he takes aim at the reporting of the case by The Wall Street Journal, Reuters and Bloomberg News. Both the Journal and Reuters have said they stand by their reporting.

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