The federal judge in the Raj Rajaratnam (Galleon Group hedge fund) case ruled that federal prosecutors can use wiretap recordings in their criminal case.  While the decision had been widely expected, it nonetheless deals a serious blow to the defendants - Mr. Rajaratnam and former hedge fund consultant, Danielle Chiesi. 

In his heavily redacted ruling, the judge wrote that government investigators were within their rights to record those conversations, and they followed the rules.  Lawyers for the defense had argued that the wiretaps were conducted improperly and should be thrown out.

C-I Note:  Much has been made about how federal investigators have, for the first time, now are using wire taps and other tools to combat institutional insider trading.  This latest ruling will likely serve as a huge deterrent to Wall Street players who may have been inclined to share insider information - now that they know "Big Brother" can be listening in on, and recording, their electronic and telephonic communications - and that such records can be introduced as evidence by federal prosecutors and regulators.   [NYT Dealbook, 11/24]