A judge today allowed recordings from the tapped phone of Galleon’s alleged insider trading kingpin, Raj Rajaratnam, in a case expected to go to trial next year. The feds had tapped thousands of Mr. Rajaratnam’s conversations over the course of a nine-month surveillance back in 2008.
The Wall Street Journal reports:
“While the SEC investigation used conventional techniques and was the bedrock of the prosecutor’s own criminal investigation, the SEC investigation had nevertheless failed to fully uncover the scope of Mr. Rajaratnam’s alleged insider trading ring and was reasonably unlikely to do so because evidence suggested that Rajaratnam and others conducted their scheme by telephone,” U.S. District Judge Richard J. Holwell wrote in an opinion Wednesday.
Mr. Rajaratnam and Danielle Chiesi — a beauty queen who later turned to a career in finance — face charges of conspiracy and fraud in the far-reaching Galleon case. The judge’s decision to allow the Rajaratnam tapes is not a good sign for the hedge fund founder at a time when the authorities are training quite the intent gaze on the securities industry.
Meanwhile, Galleon cooperating witness Richard Choo-Beng Lee is making headlines in a hedge fund probe-related arrest made earlier today. These developments can hardly offer much comfort to a hedge-fund industry that’s already been shaken by FBI raids and big-name subpoenas this week.
mtaylor [at] observer.com | @mbrookstaylor