![]() While the SEC alleges that the communications reveal Rajaratnam and other defendants’ involvement in insider trading, the wiretaps unquestionably also include private communications. The government intercepted over 18,000 telephone conversations and communications involving more than 550 individuals from ten different telephones over a sixteen-month period. No court has ruled on the propriety, Constitutionality, or relevance of the wiretaps. Rajaratnam and Danielle Chiesi (another named defendant) were given the wiretap evidence by prosecutors in the criminal case once they were indicted. Prosecutors in the criminal case have full access to the wiretapped telephone conversations between Rajaratnam and other individuals (including individuals who are not parties in the case), but the SEC does not and sought to force Rajaratnam to disclose the information. Rajaratnam is the founder of Galleon Group, a New York based hedge fund management firm. On October 16, 2009, the United States Attorney’s Office brought charges and the SEC filed a civil complaint against Raj Rajaratnam and others for insider trading. The issue in SEC v Galleon is whether an individual is required to turn over more than 18,000 wiretapped conversations acquired by the government in a criminal case when the Securities and Exchange Commission (SEC) compels the disclosure of such material in a separate but related civil case. The Second Circuit held that in determining the scope of required disclosures, courts “must balance the agency’s right of access to these materials in civil discovery against the privacy interests at stake.” Because the lower court failed to balance these interests and issued its order without regard to the legality or relevance of the wiretaps, the Second Circuit overturned the order. The court found that the extraordinary remedy of issuing a writ of mandamus was justified, as the lower court had clearly erred in its failure to determine the legality of the wiretaps or the relevance of the requested information before compelling discovery. The court explained that “there is a distinct privacy right against the disclosure of wiretapped private communications that is separate and apart from the privacy right against the interception of such communications.” Thus, it had the authority to issue the writ because the privacy harm created by disclosing the conversations could not be addressed by a subsequent appeal of the final ruling. The Second Circuit ruled that a lower court’s order to compel civil discovery of the contents of thousands of defendant’s wiretapped conversations, the legality of which had not yet been adjudicated, violated defendant’s privacy rights. ![]()
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