SEC, Justice Department Probe Media Leaks in Rajaratnam Case, Defense Says

The U.S. Justice Department and the Securities and Exchange Commission are examining leaks to the media about the insider-trading case of Galleon Group LLC co- founder Raj Rajaratnam, his spokesman said.

The SEC’s inspector general and the Justice Department’s Office of Professional Responsibility told Rajaratnam’s lawyer, John Dowd, that they have begun probing the source of leaks, the Rajaratnam spokesman said today in a press release.

“The SEC inspector general, David Kotz, phoned Mr. Dowd’s office earlier this month and indicated that he would look into the matter as part of his broader investigation into SEC media leaks,” Jim McCarthy, Rajaratnam’s spokesman, said in the statement. “On May 11, the Office of Professional Responsibility at DOJ wrote a letter to Mr. Dowd to say that they too ‘have initiated an inquiry into the allegations.’”

Rajaratnam is the central figure in an insider-trading probe that has led to charges against 21 people. Eleven pleaded guilty, including at least four who are cooperating with prosecutors in the case against Rajaratnam. Prosecutors also plan to offer as evidence wiretap intercepts of Rajaratnam’s mobile-phone calls. Rajaratnam has denied wrongdoing.

Tracy Schmaler, a Justice Department spokeswoman, declined to comment. Janice Oh, a spokeswoman for U.S. Attorney Preet Bharara in New York, where the case is to go to trial in October, also declined to comment.

SEC Spokesman

SEC spokesman John Nester referred questions to Kotz, who declined to comment.

According to McCarthy, Dowd in recent weeks asked that the two offices examine the release to the media of “protected identities and sealed information” with details that “could only have come from the government.” Among the disclosures were the identities of people who hadn’t been charged with a crime, he said.

In an April 20 letter to the two agencies posted on a website for Rajaratnam, Dowd said there was a “pervasive and continuing pattern of unconstitutional conduct by attorneys and others” acting on behalf of the SEC, Justice Department and Federal Bureau of Investigation. Dowd cited improper press releases and press conferences, the disclosure of sealed wiretap intercepts in press releases, and details of the government’s investigation.

Richard Kolko, a spokesman for the FBI in New York, declined to comment.

The case is U.S. v. Rajaratnam, 1:09-cr-1184, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: David Glovin in New York federal court at dglovin@bloomberg.net.

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