Insider Trading

William D. Cohan has an interesting column online for the Times today entitled, “A Wall Street Witch Hunt,” which discusses the February 12, 1987 arrest on insider trading charges, and subsequent guilty plea to a count of mail fraud, of a senior Goldman Sachs executive, Robert Freeman. The column tells an interesting story – but don’t miss the scathing comments from readers.

There have been nine guilty pleas so far in the Galleon hedge fund insider trading case – enough to fill a baseball field with players at every position. Now, reports suggest that the feds are beginning to add to their bench – another guilty plea is coming. Raj Rajaratnam can’t be happy with this development.

Will Autumn in New York be mingled with pain for Raj Rajaratnam? The hedge fund billionaire’s criminal trial on insider trading charges is now set to begin on October 25, after the SEC’s civil fraud suit, scheduled for August.

Just as the SEC has gained access to the government’s wiretaps to use in its civil action against hedge fund billionaire Raj Rajaratnam, Rajaratnam’s lawyer, John Dowd, has taken steps to begin to move to suppress those wiretaps based on what he contends was the government’s “material misrepresentations and omissions in its affidavits and applications to the court seeking authorization” to wiretap. 

The other day, the Securities and Exchange Commission asked the Manhattan federal district court (yes, Judge Jed Rakoff’s court) overseeing its civil claims against Raj Rajaratnam in the Galleon hedge fund insider trading case to order the defendants to turn over to the SEC the wiretap recordings that had been obtained by the Department of Justice, and then turned over to the defendants in connection with the DOJ's criminal prosecution in the case.

Joshua I. Klein, one of the more prominent members of the U.S. Attorney’s Office involved in the insider trading prosecution of Raj Rajaratnam, is expected to resign shortly to set up his own criminal defense firm, the New York Times is reporting.

There are more details in a number of articles this morning about the guilty plea entered yesterday by former McKinsey director Anil Kumar in the insider trading case also involving hedge fund billionaire Raj Rajaratnam. For example: 

·                     After Kumar allegedly

Raj Rajaratnam paid for insider information, according to Anil Kumar, a former director of McKinsey & Co who pleaded guilty to securities fraud charges today. Kumar told the court that “I understood that my conduct was unlawful.” 

More to follow….

Sometimes, people put too much faith in lawyers to solve problems. The truth is that lawyers have to work with a certain set of facts, and if the facts are overwhelmingly bad, no lawyer is going to be able to defeat that.

Raj Rajaratnam, the indicted billionaire hedge fund owner, today filed a 32 page answer to the SEC’s insider trading complaint. Among the highlights: (1) in the very first paragraph, Rajaratnam “denies that he received and/or traded on the basis of material non-public information” as alleged in the complaint; (2) the answer challenges the government’s “unprecedented use of electronic surveillance in this case,”