Judge: Rajaratnam Must Turn Over Wiretaps To SEC

Feb 2 2011 | 10:35am ET

The Securities and Exchange Commission can have the wiretaps at the center of the insider-trading case against Galleon Group founder Raj Rajaratnam, a federal judge has ruled.

U.S. District Judge Jed Rakoff yesterday ordered Rajaratnam and co-defendant Danielle Chiesi—who has pleaded guilty to criminal charges in the case but remains a defendant in the SEC's civil case—to hand over all of the wiretaps that the SEC wants by next Friday. He gave them an even shorter deadline for those communications "they have now conceded are relevant," demanding they be turned over by this coming Friday.

Rajaratnam's spokesman said he would comply with the order.

Rakoff's ruling is yet another blow to Rajaratnam, who has suffered a series of setbacks in the weeks leading up to his Feb. 28 criminal trial. Last month, Chiesi struck a plea deal with prosecutors, although she is not expected to testify against him. Two former Galleon employees also pleaded guilty in the case and may be called as witnesses against him.

Rakoff also postponed the civil trial to Aug. 22; it had been scheduled to begin on Feb. 14. He also severed the case of another hedge fund manager accused of insider-trading in the case, Zvi Goffer, from that of Rajaratnam and Chiesi. Goffer, who formerly worked at Galleon, was allegedly the head of a second insider-trading ring that overlapped with the one allegedly run by Rajaratnam.

It is the second time the Rakoff has ordered Rajaratnam and Chiesi to turn over the wiretaps; he did so last February only to have an appeals court overturn him, pending the criminal trial judge's ruling on their legality. Unfortunately for the defendants, U.S. District Judge Richard Sullivan found the intercepted conversations admissible in November.

In Depth

Related-Company Fees: Normal Industry Practice or Conflicted Compensation?

Nov 11 2015 | 4:23pm ET

Regulatory agencies as well as investors are increasingly exploring whether certain...


Ferrari Roars in Wall Street Debut

Oct 21 2015 | 4:28pm ET

Shares of supercar maker Ferrari jumped as much as 15 percent to a high of nearly...

Guest Contributor

Private Debt - What is the Opportunity?

Nov 11 2015 | 3:28pm ET

In this contributed article, Rob Allard, founding partner of Firebreak Capital...


Editor's Note

    Oct 21 2015 | 10:41am ET

    One of the most unique charity benefits in the hedge fund industry, A Leg To Stand On's (ALTSO's) Hedge Fund Rocktoberfest - NYC, raised nearly $500,000 last Thursday thanks to the generous support of major sponsors and nearly 1,400 attendees from the Tri-State finance, business and hedge fund communities. Read more…