Sunday, November 15, 2009

SEC-DOJ Dilemma

"On Monday, US District Judge Jed. S. Rakoff told the [SEC] to be ready to begin the civil insider-trading trial in five months. ... Ordinarily, civil and criminal investigators coordinate their activities. In instances where both file charges, most judges allow the government to 'stay,' or postpone the SEC case until the criminal case is completed to avoid complicating the criminal matter, according to lawyers and people familiar with the situation. ... That is possible since the SEC wouldn't want to jeopardize the government's criminal case, lawyers say. The [DOJ's] US Attorney's office in Manhattan declined to comment, as did a lawyer for [Raj] Rajaratnam. ... 'Defendants in criminal cases don't have that ability. In a criminal case, the first time a defense lawyer may see critical witnesses is in the courtroom when they're testifying,' [Michael Schacter, Wilkie Farr & Gallagher lawyer said]. ... If the SEC withdraws its case, it could be another blow for the agency, which has drawn fire from its critics recently. ... The ruling puts the spotlight back on Judge Rakoff, whose harsh SEC rulings recently have been on display. In August, the judge critcized the SEC's $33 million settlement with [BofA] Corp. over disclosure of bonuses following the bank's purchase of Merrill Lynch last year. ... Judge Rakoff has long experience in insider-trading cases. As a defense lawyer before being nominated to the federal judiciary, Mr. Rakoff represented Martin Siegel, the Kidder, Peabody & Co. investment banker, who the US alleged passed inside information about takeover deals to Ivan Boesky in exchange for suitcases of cash in the 1980s. Mr Siegel pleaded guilty to securities fraud. ... An SEC trial in advance of a criminal trial would give defendants the opportunity to depose, or interview the government's witnesses in the case. The government doesn't want to have its witnesses on the record saying anything before its put them on the stand under oath. ... Judge Rakoff in 2005 refused to postpone an SEC civil suit against Anuradha Saad, chief executive of a cancer-information company, and other executives, who were also charged by federal prosecutors. ... In an opinion rejecting the postponement, Judge Rakoff noted that because the litigation was both a criminal and civil matter, the defendants were 'fully entitled to to the timely discovery that federal law grants them in defending such an action.' In the decision, he said 'parallel proceedings' of the US Atttorney and SEC had 'bizarre aspects' and that it is 'stranger still' that the two can combine their efforts in a case 'against some hapless defendant'," my emphasis, Susan Pulliam and Kara Scannell at the WSJ, 27 October 2009, link:

More WSJ editorializing in a news article. What "harsh" rulings? I like Rakoff more every day. Preet Bharara (PB) why not let Rajaratnam depose "your" witnesses? Are you afraid they might be impeached with inconsistent statements? Or your coaching them to give perjured testimony might be exposed? Would you suborn perjury? Would you buy my bridge over the East River? It's only $1 billion. Well PB? Will anything like this happen to Lloyd Antoinette Blankfein? hah! This case looks like another DOJ waste of time.

1 comment:

Anonymous said...

Clone Rakoff.