“In a boost to prosecutors’ expanded use of secretly recorded wiretaps to pursue white-collar crimes, a federal appeals court upheld the insider-trading conviction of former hedge-fund manager Raj Rajaratnam.
“The decision by a three-judge panel of the U.S. Court of Appeals for the Second Circuit represents a victory for the U.S. attorney’s office in Manhattan, which has aggressively used wiretaps in the past five years to root out several alleged rings engaged in insider trading, a crime the government claims is particularly difficult to uncover.
“It also is a potential setback for a number of white-collar defendants. Some have argued on appeal that prosecutors left out key information in order to obtain authorization to secretly record their phone calls or that U.S. law doesn’t allow wiretaps in connection with securities-fraud probes in the first place.
“The ruling also sends a clear signal that wiretaps for white-collar crime are here to stay, say several white-collar defense lawyers, and that it might be growing.”
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