Insider-Trading Conviction Will Embolden Prosecutors With Wiretaps


The conviction of Raj Rajaratnam is the crest of an unprecedented wave of insider-trading cases expected to accelerate now that the strategy of using wiretaps against traders has proved a resounding success for prosecutors, the Wall Street Journal reports. Never before have there been so many major, unrelated insider-trading cases brought by authorities.

In the past 18 months, the U.S. has charged 47 hedge-fund managers and others with insider trading; Galleon Group’s Rajaratnam is the 35th defendant to be convicted or to plead guilty. Prosecutors are readying a new wave of charges against hedge funds, research firms, and corporate executives it believes traded on inside information. Next month marks the start of a trial for defendants in an alleged insider-trading ring connected to Galleon. Says former federal prosecutor Robert Mintz, “This conviction will undoubtedly embolden prosecutors, and we can expect more of these cases in the future.”

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