We've come to a pivotal moment in the Raj Rajaratnam case (Raj Rajaratnam news). Judge Richard Holwell in the United States District Court in Manhattan is hearing arguments about whether prosecutors can use thousands of wiretapped conversations between Rajaratnam and his alleged accomplices. Rajaratnam stands accused of insider trading, in one of the most spectacular prosecutions in recent memory.

The FBI pulled out all the stops, including the unprecedented use of wiretaps, which were once more likely to be used on mobsters. The issue is whether the FBI's application to a judge to authorize the wiretaps should have included information about previous investigative steps. To laymen, this looks like a technicality the defense is trying to exploit. Legally, it may be a whole lot more complex.

In any case, if the wiretaps are disallowed it would be a blow to the prosecution. Emails just aren't going to cut it as the main evidence any more. Targets are onto the fact that their emails can be reproduced. And the same goes for instant messaging.

The New York Times notes a telling exchange that may remind you of mob guys discussing business, knowing full well they're being surveilled: An SEC lawyer highlighted an instant-message exchange between Rajaratnam and a hedge fund manager about Computer Associates just before the company's earnings release. "My guy has seen the press release," wrote Rajaratnam, according to the testimony. "I know you are kidding," responded the hedge fund manager. He warned that his instant messages were logged and that they should be careful.  Rajaratnam responded, it was a news release "about the Yankees releasing Derek Jeter." 

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