Galleon Group LLC co-founder Raj Rajaratnam, the fund manager convicted of masterminding one of the biggest insider trading schemes in a generation, today asked a federal appeals court for a rehearing of his case a month after it upheld his conviction.
Rajaratnam’s conviction on nine counts of securities fraud and five counts of conspiracy, was upheld by a panel of three judges on the Second Circuit Court of Appeals in New York on June 24. The judges, Jose Cabranes, Robert Sack and Susan Carney, rejected the fund manager’s argument that his conviction should be vacated because prosecutors misled the lower court judge who authorized the wiretaps in 2008.
The case was the first to focus exclusively on insider trading in which U.S. investigators wiretapped their targets’ telephone conversations, a tactic used in organized-crime probes. Rajaratnam, 56, claimed prosecutors and Federal Bureau of Investigation agents omitted key facts from their request for the secret recordings, including the existence of an insider-trading investigation by the U.S. Securities and Exchange Commission.
“Rehearing is warranted because the panel’s decision in this case, which involves a significant expansion of the use of wiretaps, squarely conflicts with the decisions of other circuits,” appeals lawyers Paul Clement, Samidh Guha and Patricia Millet argued on behalf of Rajaratnam.
Jurors listened to more than 45 wiretap recordings, on some of which Rajaratnam can be heard gathering nonpublic information from his sources.
Rajaratnam says the entire panel of judges who sit on the Second Circuit should re-hear his challenge to the case, arguing that if his conviction is allowed to remain in place, the ruling “gives investigators carte blanche to wiretap any professional investor whose business entails discussing publicly traded companies on the telephone.”
The Rajaratnam appeal is U.S. v. Rajaratnam, 11-04416, U.S. Court of Appeals for the Second Circuit (New York); The Gupta case is U.S. v. Gupta, 11-cr-00907, U.S. District Court, Southern District of New York (Manhattan).
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