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Insider trading probe: Judge questions calls on wiretaps

NEW YORK – A FEDERAL judge demanded the government explain itself on Wednesday for eavesdropping on phone calls between an insider trading defendant and his wife in a case that was celebrated for its use of wiretaps.

US District Judge Richard Sullivan in Manhattan ruled in favour of the government’s right to wiretap insider trading suspects, but drew the line at the private chats between a husband and wife, saying it was the only area where he believed some suppression of the evidence might be warranted. He was the second judge to rule in favour of wiretap evidence in insider trading cases.

Judge Sullivan ordered the government to respond in writing to claims by a lawyer for defendant Craig Drimal that 13 per cent of his time on phones involved chats with his wife, including ‘deeply personal conversations about private marital matters.’ Drimal has pleaded not guilty.

Prosecutors have described the prosecution that resulted in Drimal’s 2009 arrest as the biggest hedge fund insider trading case in history. Among defendants is Raj Rajaratnam, a one-time billionaire founder of the Galleon group of hedge funds who has pleaded not guilty and insisted any trades he made were based on publicly known information. Prosecutors say the insider trading resulted in more than US$50 million (S$64.6 million) in profits.

The government began wiretapping Drimal, a former Galleon trader, in November 2007. His lawyer, Janeanne Murray, said in court papers that 98.2 per cent of the calls captured by the government and 97.4 per cent of the call-minutes involved non-pertinent conversations.

Ms Murray accused the government of a ‘cavalier disregard for marital privacy,’ saying investigators were required to discontinue monitoring if they discovered that they were intercepting a personal communication solely between Drimal and his wife. — AP