Originally posted at The Wall Street Journal.
Wall Street holy warrior Preet Bharara may finally answer for abuses of his prosecutorial power. On Thursday a federal district court ruled that a lawsuit alleging that the U.S. Attorney for the Southern District of New York violated the civil and constitutional rights of former hedge-fund manager David Ganek can proceed to discovery and trial. Hear, hear.
This fiasco began in 2010 when the Federal Bureau of Investigation publicly raided Mr. Ganek’s Level Global for insider trading, and Mr. Ganek was forced to liquidate the fund amid the damage to his reputation. The Second Circuit Court of Appeals has since overturned the conviction of the Level Global portfolio manager who had been found guilty, noting there was “no evidence” he committed securities fraud, and the Securities and Exchange Commission is disgorging penalties.
Mr. Ganek was never charged, even under the theory of insider trading that the Second Circuit tossed, and the FBI affidavit to support the Level Global search contained false and perhaps deliberately fabricated claims about his personal involvement. He says in his suit against Mr. Bharara that FBI agents deprived him of due process.
This is a major development in the case that we first wrote about last year (“Preet Bharara’s Methods”). Prosecutors and law enforcement enjoy qualified immunity that shields government officials from being sued for all but the most egregious violations of legal rights.
Yet New York Judge William Pauley rejected the government’s motion to dismiss. “Discovery is now appropriate to ascertain whether this is a case about a simple misunderstanding or whether something more troubling was afoot,” he writes, referring to the question of how and why the false allegations that destroyed Level Global entered the warrant.
Mr. Bharara’s media image is the Elliot Ness of Wall Street. Now we may learn if he has his own house in order.
Read more at The Wall Street Journal.
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