Illegal insider trading on Wall Street is rampant

Mr. Bharara previously spent five years

as an assistant U.S. attorney prosecuting

organized crime leaders of the Gambino

and Colombo crime families.

(Mr. Bharara will not be intimidated by the Wall Street gangsters...)

Crain's New York Business
By Hilary Potkewitz
10/21/10

Saying illegal dealing is on the rise, U.S. Attorney Preet Bharara says his office is readying a new round of prosecutions and will up its use of wiretaps to catch white-collar crooks.

U.S. Attorney Preet Bharara said Wednesday night that insider trading is “rampant” on Wall Street and that his office is expanding its use of wiretaps to pursue Wall Street crimes.

“From my vantage point, I can see that illegal insider trading is rampant and may be on the rise,” Mr. Bharara said to a meeting of white-collar criminal defense lawyers at the New York City Bar Association. “We have devoted significant resources to this and are adding more.”

Calling insider trading a top criminal priority for his office, Mr. Bharara hinted that a new wave of arrests was on the way, though he declined to give details. He also said that his office will bring charges against corporations where appropriate.

About a year ago, the Federal Bureau of Investigation nabbed billionaire Raj Rajaratnam in an insider trading conspiracy by using wire-taps to record transactions and conversations within the Galleon Group, Mr. Rajaratnam’s former hedge fund. The ongoing case led to indictments and the resignation of several high-profile traders and corporate insiders.

Mr. Bharara said he views the Gallon case as a model for the successful use of court-authorized wire-taps in Wall Street cases, and said he plans to expand their use in insider-trading investigations.

“If you think about it, using electronic devices to monitor trading, which is predominantly an electronic activity, makes the most sense,” he said. “It certainly makes more sense when you think of all the other non-electronic crimes where we’ve been using wiretaps for years.”

Mr. Bharara previously spent five years as an assistant U.S. attorney prosecuting organized crime leaders of the Gambino and Colombo crime families. He pointed out that organized crime and white-collar crime have started to overlap. Just last month, a criminal investigation into cocaine trafficking at the ports of New York and New Jersey uncovered a multimillion dollar “pump-and-dump” stock fraud scheme.

“As long as white-collar criminals are using the tactics of common criminals, we have no choice but to treat them as common criminals,” Mr. Bharara said.