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In Defense of Raj Rajaratnam

In Defense of Raj Rajaratnam

So your brother-in-law works at a major Wall Street bank that’s advising on a big corporate takeover. Now, let’s say he slips up at Thanksgiving dinner after downing too many martinis and gives you a hot tip about the pending deal. In Doug Bandow’s world, you should be able to trade, and profit, on that info without being afraid of ending up like “Martha f__ing Stewart” in the words of one Danielle Chiesi.

Here’s more from Bandow, a senior fellow at the Cato Institute, via his Op-Ed in Barron’s over the weekend.

The distinction between public and non-public information is legally decisive but economically unimportant. Perversely, the insider-trading laws seek to prevent people from trading on the most accurate and up-to-date information. The law seeks to force everyone to make today's decisions based on yesterday's data. It's a genuinely stupid thing to do.

Insider trading shouldn't be a crime. There typically is no victim. To the contrary, most of us benefit when prices move more rapidly to the right level.

Unfortunately, prosecutors, regulators and politicians alike periodically demonize insider trading to justify their offices and budgets. But there is no reason to punish investors who trade on accurate information. In fact, that is precisely what the financial markets should encourage.


Raj Rajaratnam Launches Web Site, Says Wiretaps Are Illegal

In addition to putting up a fancy new website, Raj Rajaratnam and his lawyers made a motion today to suppress the government's wiretap evidence. In a 75-page brief, lawyers for Raj laid out their argument that FBI Special Agent B.J. Kang and the U.S. Attorney’s office in the Southern District of Manhattan intentionally misled the court when they sought authorization secretly listen in on Raj's cell phone.

Rajaratnam Seeks Reversal of Wiretap Ruling

Attorneys for Raj Rajaratnam have filed a brief to the Second Circuit Court of Appeals seeking to reverse an order compelling them to turn over wiretap evidence to the Securities and Exchange Commission.

Battle Between Raj and WSJ Continues

Last week, we told you about a letter sent by Raj Rajaratnam’s new PR guy, Jim McCarthy to Wall Street Journal editor Mike Siconolfi complaining about the paper’s use of anonymous sources in their coverage of Raj. The specific complaint was that the paper used the phrase “a person familiar with the situation” to refer to their source, instead of identifying any inherent biases the source might have.