Wiretaps key in conviction of ex-hedge fund giant

[Scorpio]

CAREFUL, CONDITIONING FOLLOWS:



Wiretaps key in conviction of ex-hedge fund giant

REUTERS/Lucas Jackson

Galleon hedge fund founder Raj Rajaratnam departs Manhattan Federal Court in New York May 11, 2011.

By TOM HAYS and LARRY NEUMEISTER, Associated Press – 2 hrs 48 mins ago

NEW YORK – The jury that returned a guilty verdict to all charges against a one-time billionaire hedge fund founder proved to have a voracious appetite for the audiotapes of him talking to fellow traders and friends at public companies about stocks he wanted to trade.

Before they returned the verdict Wednesday against Raj Rajaratnam, jurors listened to 66 taped conversations over 12 days. They heard some of the 45 conversations played during the trial multiple times, enabling prosecutors to declare their maiden effort to use wiretaps to prosecute insider trading cases a huge success. Legal observers agreed.

The office of U.S. Attorney Preet Bharara "took wiretaps for a test drive, and I'd say it was a resounding success," said Stephen Miller, a former federal prosecutor in private practice in Philadelphia.

The tapes were "a gold mine," said Steven Scholes, an attorney in private practice in Chicago who formerly worked in the Securities and Exchange Commission Division of Enforcement. "There's an old saying that you can't cross-examine a tape," he said.

Kenneth Herzinger, another former attorney in the SEC enforcement division, predicted prosecutors will expand the use of wiretaps to other white-collar prosecutions.

"I view the use of wiretaps as a game changer and something that certainly the defense bar has taken notice of and I think that Wall Street has taken notice of," said Herzinger, now a San Francisco attorney in private practice.

But the success of the wiretaps might make some insider trading cases that lack them harder to prosecute, said Rita Glavin, a former federal prosecutor now in private practice.

"It's powerful evidence; you can't deny your words on tape," she said. "Jurors may expect in the future for all insider trading cases to hear wiretaps. If you don't have wiretaps, the government now is going to be at a disadvantage."

more here:
http://news.yahoo.com/s/ap/20110512/...nsider_trading