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After Gupta, Wall Street watch out...
Without former U.S. District Judge Richard Holwell, there probably would not have been any prosecution of Rajat Gupta, the former Goldman Sachs director and McKinsey chief convicted Friday of insider trading and conspiracy.
In 2010, Holwell ruled that prosecutors could use wiretap evidence in their case against Galleon Group hedge fund founder Raj Rajaratnam, rejecting defense arguments that the government is not authorized to use wiretaps to investigate insider trading.
If prosecutors hadn't been able to use those Rajaratnam wiretaps -- in which Rajaratnam obliquely referred to tips from a Goldman insider -- it's unlikely the government would have gone to trial against Gupta, since the tapes were the only link between Gupta's alleged tips and Rajaratnam's trades.
Holwell, who is now in private practice at Holwell, Shuster & Goldberg, said that wiretaps have forever changed the way the government investigates insider trading.
"Prior to the Rajaratnam case, you look at insider trading rings, and they're very small. Prosecutors would wind up getting one, two, three people." The Rajaratnam case showed that with wiretaps, you can sweep in rings of tippers, leading to "a vast array of prosecutions," Holwell said.
It's also unlikely, he said, that prosecutors would have uncovered Gupta's role in Rajaratnam's insider trading ring if they had not been authorized to tape the Galleon founder.
The classic evidence in insider trading prosecutions is trading and telephone records, but since Gupta didn't profit directly from Rajaratnam's trades, he probably wouldn't have come to the government's attention if it hadn't been for those taped references.
http://www.reuters.com/article/2012/06/17/us-goldman-gupta-holwell-idUSBRE85G09D20120617
Without former U.S. District Judge Richard Holwell, there probably would not have been any prosecution of Rajat Gupta, the former Goldman Sachs director and McKinsey chief convicted Friday of insider trading and conspiracy.
In 2010, Holwell ruled that prosecutors could use wiretap evidence in their case against Galleon Group hedge fund founder Raj Rajaratnam, rejecting defense arguments that the government is not authorized to use wiretaps to investigate insider trading.
If prosecutors hadn't been able to use those Rajaratnam wiretaps -- in which Rajaratnam obliquely referred to tips from a Goldman insider -- it's unlikely the government would have gone to trial against Gupta, since the tapes were the only link between Gupta's alleged tips and Rajaratnam's trades.
Holwell, who is now in private practice at Holwell, Shuster & Goldberg, said that wiretaps have forever changed the way the government investigates insider trading.
"Prior to the Rajaratnam case, you look at insider trading rings, and they're very small. Prosecutors would wind up getting one, two, three people." The Rajaratnam case showed that with wiretaps, you can sweep in rings of tippers, leading to "a vast array of prosecutions," Holwell said.
It's also unlikely, he said, that prosecutors would have uncovered Gupta's role in Rajaratnam's insider trading ring if they had not been authorized to tape the Galleon founder.
The classic evidence in insider trading prosecutions is trading and telephone records, but since Gupta didn't profit directly from Rajaratnam's trades, he probably wouldn't have come to the government's attention if it hadn't been for those taped references.
http://www.reuters.com/article/2012/06/17/us-goldman-gupta-holwell-idUSBRE85G09D20120617