As Don King might have summed it up, last week's conviction of Raj Rajaratnam based in large part on wiretap evidence was one that probably could have occurred "Only in America."

Robert Falkner, an attorney with law firm Reed Smith, observes that it is highly unlikely that the UK's Financial Services Authority, for example, would have been able to introduce wiretap evidence against Rajaratnam in a similar trial in the UK.

Falkner writes that in the UK,

telephone communications may only be intercepted under a warrant issued by the Home Secretary. Only authorities such as the police and the intelligence services may obtain interception warrants - the FSA has no such power.

Further, any material obtained under one of these warrants may only be used for background intelligence and is not admissible in court proceedings. It is therefore likely the FSA would not have been able to use a wiretap to secure Rajaratnam's conviction.

As discussed here previously, FSA rules now require that calls on the mobile cell phones of traders' at banks and brokerages used for business must be recorded to help the FSA crack down on insider trading. And there are other rules that require taping of all conversations concerning trade execution, Falkner adds. While these tapes may be admissible as evidence in court, Falkner points out that they are unlikely to have much impact because, unlike with wiretaps, UK traders are well aware that calls on these lines are being recorded.

Topics