


This is WEEKEND EDITION from NPR News. I'm Scott Simon.

This week's conviction of hedge fund billionaire Raj Rajaratnam is reviving the government's campaign against insider trading. Prosecutors in Manhattan have 11 more defendants waiting in the dock and another big trial scheduled to begin Monday. NPR's Carrie Johnson looks at what's to come.

CARRIE JOHNSON: Over the past few years, federal prosecutors in New York have filed insider trading charges against 47 people. More than half of them pleaded guilty - but not Zvi Goffer. He was a trader at Rajaratnam's hedge fund who showed up several times to watch the trial of his former boss. On Monday, Goffer will be at the courthouse again for his own trial.

Authorities say he passed out disposable cell phones to people who gave him stock tips then broke the phones in half after he made illegal trades.

Bill Johnson used to prosecute fraud cases in New York.

Mr. BILL JOHNSON (Attorney): That's always, you know, some of the prosecutors' best evidence to show that there's guilty knowledge because of an attempt to cover up what was done.

JOHNSON: Investigators snooped on more than 10,000 of Goffer's phone calls to build a case that he was trading on inside information. Recordings of the secret calls will be a big focus of his trial, just as they were in the Rajaratnam case.

Former prosecutor Sol Wisenberg says that can be powerful evidence.

Mr. SOL WISENBERG (Former Prosecutor): If you've got somebody on a telephone whispering or saying I shouldn't be telling you this or talking about how he's gone around town and thrown his hard drive into a garbage can, I think that has incredible effect on a jury.

JOHNSON: The U.S. attorney in New York, Preet Bharara, says his office is committed to breaking up illegal trading networks on Wall Street. Legal experts say he's got no shortage of material to work with.

Professor DAN RICHMAN (Criminal Law, Columbia University): Every time you're up on a wiretap, you're getting all sorts of investigative leads, some of them directly relevant to the charges you end up bringing; others not.

JOHNSON: That's Dan Richman. He teaches criminal law at Columbia University.

Mr. RICHMAN: Government investigators will have a field day working through what they've gained through this investigation.

JOHNSON: The impact that the hard-nosed investigation will have on Wall Street is an open question. Harvey Pitt is a lawyer who represented key players in the last major insider trading scandal.

Mr. HARVEY PITT (Attorney): The lessons that were learned in the mid '80s, a quarter of a century ago, appear either not to have been learned by a new generation of securities industry professionals or to have been forgotten by older professionals.

JOHNSON: But Richman of Columbia Law School says prosecutors are now making life a lot harder for traders who want to break the law by driving them away from using phones the FBI can tap.

Mr. RICHMAN: When being a trader in securities starts making you look like a player in "The Wire," you probably might want to reconsider what you're doing.

JOHNSON: Or to consider even more creative options to protect themselves from federal investigators.

Mr. MATT LEVINE (Former Prosecutor): Will all the hedge funds now, you know, hire companies to sweep their phones to see if they're wiretapped, even if nothing's going on, just as a precaution?

JOHNSON: That's Matt Levine. He used to prosecute fraud cases in Brooklyn. He says Wall Street executives might turn to new software programs that take inspiration from another popular TV program.

Mr. LEVINE: Instant messages that, you know, like in the old "Mission: Impossible" series, you know, explode after - or destroy themselves - after 30 seconds?

JOHNSON: That sounds farfetched, but when it comes to getting an edge on Wall Street, some people know no bounds.

Carrie Johnson, NPR News, Washington.






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