Judge: Lawsuit Against Feds by Level Global Co-Founder Ganek Can Proceed

Mar 11 2016 | 9:37pm ET

Level Global co-founder David Ganek’s lawsuit against U.S. Attorney Preet Bharara, several prosecutors and the FBI has been allowed to move forward.

U.S. District Judge William H. Pauley III agreed that Ganek’s assertions merited a closer look, saying that the process would determine whether U.S. prosecutors and FBI agents violated Ganek’s constitutional rights when they raided Level Global’s offices in 2010 amid a crackdown on insider trading. 

News of the ruling was released on Thursday. The lawsuit, which seeks unspecified damages, alleges the evidence on which a judge relied when approving a warrant for the raid was fabricated. The raid violated Ganek’s civil rights and was responsible for the closure of $4 billion Level Global in February 2011, the suit claims, and significant reputational damage to Ganek.

Ganek was never charged with any wrongdoing. In addition to Bharaha, his suit names current and former prosecutors and FBI agents as defendants, all of which enjoy a measure of immunity designed to protect government officials from being sued except in cases of extraordinary violations of legal rights.  

"These are grave allegations," Pauley wrote in the 35-page decision. “Discovery is now appropriate to ascertain whether this case is about a simple misunderstanding or whether something more troubling was afoot.” As a result of Pauley’s ruling, the defendants will now have to produce documents related to the search warrant, among other evidence.

The ruling made no attempt to decide the merits of Ganek’s claims, only to say that they were plausible enough to warrant additional investigation. Nonetheless, they are a further embarrassment to the Southern District following a raft of vacated convictions, dropped indictments and returned fines that have followed the infamous December 2014 Newman Ruling which significantly raised the bar for insider trading convictions. 

In that decision, a federal appeals court vacated the 2012 insider trading convictions of two hedge fund managers, one of which was Anthony Chaisson – a co-founder and portfolio manager at Level Global. 


In Depth

PAAMCO: Will Inflation Deflate the Asset Bubble?

Jan 30 2018 | 9:49pm ET

As the U.S. shifts from monetary stimulus to fiscal stimulus, market pricing should...

Lifestyle

CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Boost Hedge Fund Marketing ROI By Raising Your ROO

Feb 14 2018 | 9:57pm ET

Tasked with delivering returns on client capital, a common dilemma for many alternative...