NEW YORK (Reuters) - Galleon hedge fund founder Raj Rajaratnam wants evidence concerning Goldman Sachs Group Inc GS.N stock and a score of other stocks thrown out of a U.S. government criminal case alleging insider trading, according to court papers on Thursday.
Rajaratnam was arrested last October and charged along with 20 others in what prosecutors described as the biggest probe of insider trading in hedge funds, and the first significant Wall Street case to use secret telephone recordings.
In a filing on Thursday, Rajaratnam’s lawyers said that of 21 stocks identified by the government in a March letter, 10 “were never mentioned in any of the government’s applications for authorization to wiretap Rajaratnam’s telephone.”
The request to throw out this alleged evidence follows a similar request on April 16 and a motion last Friday asking U.S. District Judge Richard Holwell to suppress thousands of recordings from the case.
Rajaratnam argued that an FBI agent’s initial applications to conduct wiretaps in the probe misled a judge because they contained false statements.
Those stocks and others are not in the formal charges against Rajaratnam that he illegally traded in 12 companies, netting about $45 million.
The letters said he conspired to obtain material, nonpublic information about the quarterly earnings of Goldman before announcements in June and December 2008.
It said he also conspired to get confidential information on the $5 billion purchase by Warren Buffett's Berkshire Hathaway Inc BRKa.NBRKb.N of Goldman preferred stock before the September 2008 announcement of that transaction.
The Wall Street Journal reported in April that former Goldman director Rajat Gupta told Rajaratnam about Berkshire’s investment before it became public, citing an unidentified source. Gupta’s spokesman said he did nothing wrong.
“The government’s applications to wiretap Mr. Rajaratnam’s telephone refer to 13 stocks which have never been identified in any of the government’s letters or charging documents as being at issue in this case,” Thursday’s brief by attorney John Dowd said.
He added that the government “simply ignores the most obvious question of all: Why, if it intended from the beginning to prosecute Mr. Rajaratnam for trading or conspiring to trade in all of the various stocks ... did it not simply identify those in the criminal complaint or indictments.”
Oral arguments on the wiretaps will be heard by Holwell on June 17, according to court papers. His decision would be published before the October 25 start of the trial of Rajaratnam and his principal co-defendant, Danielle Chiesi, a former trader with New Castle Funds LLC in New York.
The cases are USA v Raj Rajaratnam and Danielle Chiesi, U.S. District Court for the Southern District of New York, No. 09-01184.
Reporting by Grant McCool, editing by Gerald E. McCormick
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