SEC Investigating Leaks in Galleon Insider Trading Case

The government’s case against accused insider trader Raj Rajaratnam has taken an unexpected twist. The government is now investigating leaks to journalists alleged to have come from the Justice Department and the Securities and Exchange Commission.

The Inspector General of the SEC has informed attorneys for Rajaratnam that it is investigating the source of allegedly improper leaks of information, according to a spokesman for Rajaratnam.

Separately, the Office of Professional Responsibility for the Department of Justice has also informed Rajaratnam’s attorney’s that it is launching a leak investigation.

Raj Rajaratnam
Raj Rajaratnam

The investigations come after complaints from Rajaratnam’s attorneys, who claim that the government has been leaking sealed information to reporters, including the identities of individuals involved in the case who haven’t been charged with any crimes.

Many of the alleged government leaks have been published in the Wall Street Journal. Last month, for example, the Journal published the named of the former Goldman Sachs executive who allegedly tipped Rajaratnam about Warren Buffet’s investment in Goldman. Rajaratnam’s attorneys say that information “could only have come from the government itself.”

Rajaratnam founded the New York based hedge fund, Galleon Group. Last October he was arrested on insider trading charges. His attorneys say that Rajaratnam is innocent of the charges.

The Inspector General for the SEC was not immediately available for comment. The Office of Professional Responsibility at the Justice Department said it would not discuss cases.

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