Preet Bharara

by artood2 Tue Nov 01, 2011 2:08 pm

http://finance.fortune.cnn.com/2011/08/02/preet-bharara-the-enforcer-of-wall-street/

With the effective use of wiretaps in the Rajaratnam case -- a decision that was made prior to Bharara's taking over the office and required a judge's approval based on evidence of probable cause -- he is credited with instilling a new sense of fear among Wall Street traders of every stripe who can no longer be sure when, or if, law enforcement officials might be listening in. Bharara made that point emphatically when he announced Rajaratnam's arrest. "We believe this case represents the first time that court-authorized wiretaps have been used to target significant insider trading on Wall Street," he said in his prepared remarks. "All the defendants charged today were ultimately caught committing their alleged crimes over phones that we were listening to. This aggressive use of wiretaps is important: It shows that we are targeting white-collar insider-trading rings with the same powerful investigative tools that have worked so successfully against the mob and drug cartels."

Neil Barofksy, who worked with Bharara as a prosecutor in the Southern District and who just completed two years as the special inspector general of the TARP program, says he believes Bharara has changed the rules of the road on Wall Street. "It scared the hell out of people," he says. "It's the thinking twice about doing the transaction because there's so many different potential ways now of getting caught. Your cellphone is not safe. Your instant message isn't safe. [He] sent a message: 'Not only are we going to get you, but you're not going to be able to cover your tracks.' Preet has really taken advantage of a unique opportunity to use these tools to make a significant difference on how people approach their jobs on Wall Street."

Others are dubious that the Rajaratnam verdict will change behavior on Wall Street. While conceding the prosecution was a "wake-up call" and representative of a "new era of enhanced enforcement," Richard Scheff, chairman of the Philadelphia law firm Montgomery McCracken and a former consultant to the assistant secretary of the Treasury for law enforcement in the Clinton administration, says he thought the verdict's actual impact would be less than expected. "My experience is, people don't think they're going to get caught," he said. "There is significant money to be made -- and greed drives behavior."

The main lingering criticism of Bharara -- one that may need resolution before his elevation -- is that the new sheriff of Wall Street has brought no criminal or civil cases against the bankers whose actions helped cause and exacerbate the financial crisis. Critics find this unacceptable. "The civil charges that should be brought [against Wall Street] are there screaming out to be brought," former New York governor and attorney general Eliot Spitzer said on CNN. "And the fact that it hasn't been done yet is really staggering." Spitzer was the public voice for a chorus that still echoes privately in homes around the country and outside of Wall Street (and in Inside Job director Charles Ferguson's plea in his Academy Awards acceptance speech).