United States v. Rajaratnam
2013 U.S. App. LEXIS 12885
| 2d Cir. | 2013Background
- Rajaratnam was convicted in SDNY on five securities-fraud conspiracy counts and nine securities-fraud counts arising from inside information between 2003–2009.
- He challenged the wiretap evidence suppression and the jury instruction linking inside information to trading.
- The district court applied Franks v. Delaware to assess suppression and found no material misstatements or omissions affecting probable cause or necessity.
- A Franks hearing occurred solely on the necessity issue, focusing on Khan’s reliability and the SEC investigation omission.
- The district court ruled the SEC omission was not material and did not warrant suppression, and it denied a Franks hearing on probable cause.
- On appeal, the Second Circuit affirmed, holding the Franks framework appropriate and the suppression nonviable, and upholding the jury instruction as satisfying the known standard.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Franks framework applied to Title III wiretap? | Rajaratnam argues Franks does not apply to wiretaps. | Rajaratnam contends district court misapplied Franks to suppression. | Affirmed: Franks applies to Title III wires. |
| Was SEC- investigation omission material? | Rajaratnam asserts omission was material to necessity. | USAO contends omission not material; not reckless. | Affirmed: omission not material; no suppression. |
| Jury instruction on insider information | Rajarathnam argues instruction allowed conviction without causal link. | Government argues instruction aligns with knowing possession standard. | Affirmed: instruction satisfied the knowing possession standard. |
Key Cases Cited
- United States v. Bianco, 998 F.2d 1112 (2d Cir. 1993) (Franks framework compatible with Title III)
- United States v. Miller, 116 F.3d 641 (2d Cir. 1997) (Franks applied to wiretap obtained with informant info)
- United States v. Reilly, 76 F.3d 1271 (2d Cir. 1996) (reckless disregard standard context for omissions)
- Franks v. Delaware, 438 U.S. 154 (1978) (exclusionary rule for misstatements/omissions)
- United States v. Royer, 549 F.3d 886 (2d Cir. 2008) (knowing possession standard adopted)
- Teicher, 2d Cir. (1993) (recognizes knowing possession rationale)
- CSX Transportation, Inc. v. McBride, 131 S. Ct. 2630 (2011) (discusses causation concept in securities context)
- Neder v. United States, 527 U.S. 1 (1999) (harmless error in jury instructions)