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November 24, 2009 3:19 PM

Rajaratnam Responds to SEC Charges

Posted by Brian Baxter

Billionaire hedge fund founder Raj Rajaratnam responded forcefully to SEC insider trading charges in papers filed Tuesday by his lawyers at Akin Gump Strauss Hauer & Feld.

In the 32-page response, Akin Gump lawyers claim that wiretaps federal investigators used to implicate Rajaratnam in a $20-million insider trading ring were unconstitutional. They also say the Galleon Group founder was already working with investigators on an inquiry into another hedge fund and that he relied on research analysts, not inside information, to grow his business.

Akin Gump litigator John Dowd is leading Rajaratnam's legal team with help from partners Terence Lynam, Robert Hotz, Jr., Samidh Guha, and William White. Akin Gump is now one of 14 firms retained by defendants to fight insider trading accusations in the civil case. 

Intel Capital strategic investment director Rajiv Goel has hired Thompson Hine partner Norman Block, while IBM senior vice president Robert Moffat, Jr., is being advised by Bingham McCutchen partner Kenneth Schacter and of counsel Gerald Russello.

Veteran defense lawyer Robert Morvillo and his son Gregory from New York's Morvillo, Abramowitz, Grand, Iason, Anello & Bohrer are representing McKinsey director Anil Kumar. Kelley Drye & Warren partners Alan Kaufman and Thomas Kinzler are advising Danielle Chiesi, an employee at New Castle, which used to be the hedge fund group of Bear Stearns Asset Management. New Castle has hired Skadden, Arps, Slate, Meagher & Flom's Douglas Kraus and Steven Glaser.

Defendants added to the civil case when federal prosecutors and SEC regulators expanded their inquiry in early November have also lawyered up.

Roland Riopelle of New York's Sercarz & Riopelle is advising David Plate, an employee of the Schottenfeld Group, a New York trading firm that is represented by Kenneth Breen at Paul, Hastings, Janofsky & Walker. Atheros Communications vice president Ali Hariri, who appeared in court with a federal public defender after being arrested on November 5, has retained New York solo practitioner Harlan Protass.

Five defendants who are cooperating with the government in its criminal and civil cases have also retained counsel.

Kobre & Kim cofounder Steven Kobre is representing Ali Far, a former technology portfolio manager for Rajaratnam who entered a guilty plea earlier this month. Richard Choo-Beng Lee, who cofounded a California hedge fund with Far, is also cooperating after entering a guilty plea. K&L Gates partners Jeffrey Bornstein and Laura Brevetti are advising Lee.

Gautham Shankar, a trader at Schottenfeld Group, has retained New York solo practitioner Frederick Sosinsky. Richard Schaeffer of New York's Dornbush Schaeffer Strongin & Venaglia is representing another cooperator, Steven Fortuna, proprietor of Boston hedge fund S2 Capital Management.

Roomy Khan, the government's star witness, is being advised by little-known New York lawyer Stanislao German.

Counsel for three defendants--New Castle general partner Mark Kurland, Moody's analyst Deep Shah, and Schottenfeld trader Zvi Goffer--have yet to enter appearances in the SEC case. (Shah is reportedly conferring with defense counsel in Mumbai.)

In the criminal case, Lawrence Iason of Morvillo Abramowitz is representing Kurland and Buchanan Ingersoll & Rooney's Cynthia Monaco and Anderson Kill & Olick's Dennis Nolan are representing Goffer.

The government's criminal case has enlisted its own formidable team of lawyers for the defendants, including Skadden litigation chair David Zornow and partner David Meister, who are counsel for Intel's Goel.

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