scion Member Level Tuesday, 10/05/10 10:39:32 AM Re: None Post # 6263 of 21826 Go Rajaratnam Takes Stand at Hearing October 4, 2010, 5:26 pm dealbook.blogs.nytimes.com/2010/10/04/rajaratnam-takes-center-stage-at-galleon-hearing/ 7:05 p.m. | Updated Almost a year to the day after agents from the Federal Bureau of Investigation arrested him on insider-trading charges, the hedge fund manager Raj Rajaratnam took the witness stand at a pretrial hearing in federal district court on Monday, raised his right hand and swore to the tell the truth, the whole truth and nothing but the truth. Mr. Rajaratnam appeared before Judge Richard J. Holwell in a Lower Manhattan courtroom at what might be the crucial hearing ahead of the actual trial. At issue: whether to admit into evidence the roughly 2,400 wiretapped conversations between Mr. Rajaratnam and his friends and accused accomplices. For three days, his lawyers, led by John Dowd of Akin Gump Strauss Hauer &; Feld, are arguing that the government illegally obtained the wiretap evidence by failing to disclose previous investigations of Mr. Rajaratnam by the F.B.I. and the Securities and Exchange Commission. The 53-year-old Mr. Rajaratnam, founder of the Galleon Group, was indicted on charges of securities fraud and conspiracy in what the Justice Department is calling the biggest hedge fund insider-trading case in American history. He has pleaded not guilty, along with his co-defendant, Danielle Chiesi, who also showed up for Monday’s hearing. The case has produced 21 arrests and several guilty pleas. Mr. Rajaratnam’s trial is scheduled to begin in January. But before the wiretap hearing, Judge Holwell called Mr. Rajaratnam to the stand for a mini-hearing to make sure he understood that his law firm, Akin Gump, had a potential conflict of interest in the case. Before his testimony, Mr. Rajaratnam sat toward the back of the courtroom looking relaxed and casually chit-chatting with Samidh Guha, an Akin Gump partner working on the case. What was Akin Gump’s conflict? The firm also represents AM General, the maker of the Humvee military vehicles, as well as sport utility vehicles sold under the dying Hummer brand. It turns out that Lauren Goldberg, a former federal prosecutor who worked on the warrant application and will be a witness at the hearing, is now an in-house counsel at the parent company of AM General. (The billionaire Ronald Perelman’s MacAndrews &; Forbes, where Ms. Goldberg works as a senior vice president, owns AM General.) Dressed in a dark suit, white shirt and dark-blue tie, Mr. Rajaratnam said little on the stand, responding with “no, your honor” and “yes, your honor.” Judge Holwell, who conducted the questioning, explained the implications of Akin Gump’s divided loyalties, like the possibility that Mr. Dowd could choose to not question Ms. Goldberg as vigorously “so as not to disturb the relationship with AM General and its owners.” Mr. Rajaratnam said that he was not bothered by any of this. Perhaps his most emotional moment on the stand was when the judge asked whether he was happy with Akin Gump’s representation so far. “Very much so, you honor,” he replied. At the end of the five-minute session, Mr. Rajaratnam waived his right to conflict-free representation and right of appeal on the grounds of ineffective assistance of counsel. (This neat little Q.&;A., for all you curious law students out there, is called a Curcio hearing.) With that, Mr. Dowd of Akin Gump opened the main event. In a hard-hitting opening statement, Mr. Dowd accused the government of misleading Judge Gerard Lynch into authorizing the wiretaps. He argued that because the S.E.C. had spent more than a year building a “classic insider-trading case” against Mr. Rajaratnam, the use of wiretapping, which had never been used before in an insider-trading case, should not have been granted. “They gamed the system,” Mr. Dowd said. A federal prosecutor, Jonathan Streeter, responded that the government acted fairly and that the unprecedented surveillance tactics were necessary because the S.E.C.’s investigation had failed to yield sufficient criminal evidence. – Peter Lattman http://dealbook.blogs.nytimes.com/2010/10/04/rajaratnam-takes-center-stage-at-galleon-hearing/