David Siegal of Haynes and Boone on Galleon Wiretap Decision: "The ruling significantly increases the pressure on the defendants to consider whether to plead guilty."
NEW YORK - In a big victory for federal prosecutors, Galleon Group hedge fund founder Raj Rajaratnam lost his bid to suppress secretly recorded conversations from his pending criminal trial on insider-trading charges.
U.S. District Judge Richard Holwell on Wednesday endorsed the use by prosecutors of wiretaps to investigate a fraudulent insider trading scheme, even though it does not specifically authorize wiretaps to investigate insider trading alone.
David Siegal, Haynes and Boone New York partner and a former federal prosecutor, tells Reuters that that the decision "significantly increases the pressure on the defendants to consider whether to plead guilty."
"Recordings of the precise words spoken by a tipper and tippee in an insider trading case can be powerful evidence to demonstrate criminal intent," Mr. Siegal said. "Nevertheless, a sentence arising from a guilty plea may be so severe that a defendant may choose to go to trial anyway."