A pair of government watchdogs have agreed to look into claims that officials from the Department of Justice and the Securities and Exchange Commission leaked sensitive information to the media about the insider trading investigation of Raj Rajaratnam and his Galleon hedge funds.

David Kotz, SEC inspector-general, called Mr Rajaratnam’s lawyer, John Dowd, on May 7 to inform him that he would include the Galleon-related complaints about leaks in his investigation into the SEC’s handling of its high-profile fraud case against Goldman Sachs.

Earlier this month, the DoJ’s office of professional responsibility informed Mr Dowd that it had “initiated an inquiry” regarding his allegations of leaks to the media from the US Attorney’s office in New York, as well as the FBI.

In April, Mr Dowd wrote to both watchdogs, complaining about a “pattern of unconstitutional conduct” by people working for the DoJ and SEC that threatened the right of his client to a fair trial.

Mr Rajaratnam was charged in October of being at the centre of a sprawling insider trading ring involving more than 20 people at various companies who allegedly passed sensitive information to him and others, reaping millions of dollars in illicit profits. So far, 11 defendants have pleaded guilty. Mr Rajaratnam maintains his innocence.

Prosecutors obtained approval for a wiretap on Mr Rajaratnam’s phones from a federal judge. Excerpts from his conversations were used to build the case against him last year.

In the past month, Mr Rajaratnam has mounted an aggressive defence. In early May, his lawyers filed a motion to suppress evidence gathered from the wiretap of his cellphone on the grounds that prosecutors had withheld important information from the judge who granted permission for the recordings.

The motion argued that prosecutors failed to note that Roomy Khan, the confidential informant helping them with Mr Rajaratnam, had a prior criminal record. The motion also contended that prosecutors chose statements from the transcripts of the recorded conversations in a highly selective fashion in order to paint Mr Rajaratnam in the worst light possible.

Mr Dowd’s letter to the internal watchdogs of the DoJ and SEC claimed that government statements about his client at press conferences were overly negative. He also claimed that news articles about his client, mostly in the Wall Street Journal, reflected improper leaks from government officials.

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