By all accounts, the government prosecution of hedge fund manager Raj Rajaratnam, cofounder of the now defunct hedge fund Galleon Group, involved tactics by law enforcement that have rarely been used in “white” collar prosecutions. In 2011, the U.S. Attorney’s Office for the Southern District of New York reported that 56 people had been charged with insider trading and more than 50 had either pled guilty or been convicted at trial as part of the probe into Galleon, an investigation in which wiretaps played a critical role in securing these convictions. (See Patricia Hurtado, “FBI Pulls Off ‘Perfect Hedge’ to Nab New Insider Trading Class,” Dec. 20, 2011, 12 am ET, http://www.bloomberg.com/news/2011).
By the end of October 2011, Rajaratnam himself had been found guilty of five counts of conspiracy and nine counts of insider trading and was sentenced to an 11 year prison sentence, the longest in U.S. history for insider trading. At his trial, the government introduced 45 wiretap recordings from more than 2,400 taped conversations recorded by the New York field office of the Federal Bureau of Investigation. Id. Rajaratnam’s lawyers have filed an appeal to the U.S. Court of Appeals for the Second Circuit on the grounds, in part, that the wiretaps were illegal. Oral argument is scheduled for this fall.
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