Galleon hedge fund founder Raj Rajaratnam and co-defendant Danielle Chiesi, indicted in a sweeping insider trading case, must hand over wiretap evidence to U.S. market regulators, a judge ruled on Tuesday.
As many as 14,000 interceptions of phone calls were made in the criminal investigation involving Wall Street and Silicon Valley firms that was announced in October last year.
Lawyers for Rajaratnam, Chiesi and others accused in the probe had asked U.S. District Court Judge Jed Rakoff in New York to prevent use of the recordings from the criminal probe in the civil fraud trial scheduled to start in August.
But the judge said Rajaratnam and Chiesi, who were both indicted on charges of conspiracy and securities fraud in the criminal probe, had until February 15 to provide wiretap recordings to the Securities and Exchange Commission.
The notion that only one party to a litigation should have access to some of the most important non-privileged evidence bearing directly on the case runs counter to basic principles of civil discovery in an adversary system, Rakoff's written order said in part.
While the SEC and criminal prosecutors often coordinate with each other, there are limits on the information they can share in parallel civil and criminal cases, which is why the defense was ordered to provide the material and not the prosecutors.
Prosecutors have described the case as the biggest hedge fund insider trading case in the United States.
(Reporting by Grant McCool; Editing by Gary Hill)