Wednesday, 23 July 2014
Last updated 1 hour ago
Aug 17 2010 | 12:21pm ET
In what may prove a battle for all the marbles in the Raj Rajaratnam insider-trading case, prosecutors will be forced to defend the wiretaps at the center of their case against the Galleon Group founder next month at an evidentiary hearing.
U.S. District Judge Richard Holwell granted Rajaratnam’s request for the hearing, which will be held on Sept. 7, saying the former hedge fund billionaire had effectively called into question whether prosecutors and federal investigators complied with the law while seeking the taps, which recorded about 2,400 conversations involving Rajaratnam.
“Rajaratnam has made a substantial preliminary showing that the government recklessly or knowingly misleadingly omitted several key facts” from its wiretap affidavit, Holwell ruled, including whether the wiretap applications included “a full and complete statement as to whether or not other investigative procedures have been tried and failed or why they reasonably appear to be unlikely to succeed if tried or to be too dangerous.”
Rajaratnam’s lawyer, John Dowd, hailed Holwell’s decision to hold the hearing, saying it was “a vindication of the principle that the government must be candid with the court when seeking permission to eavesdrop on private conversations.”
But Dowd was likely less than happy with Holwell’s decision to deny Rajaratnam’s bid to exclude evidence of illegal trading of 23 companies’ securities, which Rajaratnam’s side argued the government had unfairly inserted into the case after an unexplained delay.
“The ‘core criminality’ alleged in each count is that Rajaratnam and [co-defendant Danielle] Chiesi participated in certain identified conspiracies to commit securities fraud,” Holwell ruled. “Those allegations remain unchanged. The government has simply added detail to its allegations about the means used to commit securities fraud.”
Rajaratnam and Chiesi, a former executive at hedge fund New Castle Partners, have both pleaded not guilty. They are set to go on trial in January. Twelve of the 21 people charged in the interlocking insider-trading schemes have pleaded guilty, and many are cooperating with prosecutors in their case against Rajaratnam and Chiesi.
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…