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SEC Wants Hedge Fund Founder Rajaratnam To Hand Over Wiretap Evidence

New York (HedgeCo.net) – Because of legal hurdles in obtaining 14,000 wiretap intercepts, the SEC asked a judge to order hedge fund founder Raj Rajaratnam to share the intercepts that his lawyers got from federal prosecutors, Bloomberg reports.

“Defendants have the wiretap information; the commission does not,” SEC lawyer Valerie Szczepanik said in a letter filed in court, according to Bloomberg. “It would be highly inequitable and inconsistent with the federal rules to permit this case to be tried while defendants possess such an informational advantage.”

Rajaratnam’s lawyer attacked the U.S. government’s wiretap evidence saying he would file a motion to suppress the telephone recordings which were used to arrest Rajaratnam and more than a dozen other people in the Galleon raid. A hedge fund manager known as “Tipper X”, and hedge fund consultant Roomy Khan are cooperating with investigators in providing evidence against Rajaratnam.

“The recordings were cherry picked and mismanaged and someone did not do their homework,” Dowd told the Judge last week.

Federal prosecutors have doubled the sum of the allegations and former senior partner at McKinsey & Co., Anil Kumar, pleaded guilty to conspiracy, insider trading and securities fraud.

Rajaratnam was taken into custody in New York on Oct. 16, 2009 in what is being called the USA’s largest hedge fund insider-trading scheme.

The insider trading case involves the employees of some of America’s best-known companies, including International Business Machines Corp, McKinsey & Co and Intel Capital, an arm of Intel Corp. Chiesi, an executive at New Castle Funds LLC was also indicted on multiple counts of conspiracy and securities fraud.

A civil lawsuit is scheduled for August 2, 2010. The prosecution has also indicted Rajaratnam on criminal charges.

Alex Akesson
Editor for HedgeCo.net
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