More -- Of Search Warrants V. Subpoenas -- And "Tipping" Or Trading

Peter J. Henning, writing for the New York Times' DealBook, has a very solid piece out, just now, looking at the tactical implications of the government's decision to get judicially-preapproved search warrants, and conduct raids, yesterday -- rather than the more polite issuance of civil subpoenas, in due course -- with return dates weeks or months -- in the future.

Do go read it all -- his is quite informative and practical, in its explanations -- and suggests a harrowing next few weeks, for those targeted. It is now time to "squeal, and cut a deal" -- or, if they don't -- likely face wide-ranging civil and criminal charges (and eventually be fitted for an orange jumpsuit):

. . . .The execution of search warrants at three hedge funds marks a significant escalation of the government inquiry into insider trading. By using a search warrant rather than a grand jury subpoena, prosecutors have signaled there is a good chance that securities laws were violated, and they want evidence gathered quickly and in a way that avoids the possibility that some material might be destroyed. . . .

The decision to use a search warrant rather than a subpoena may indicate the Justice Department does not necessarily trust that a subpoena will be fully complied with.

The search of the three hedge funds also sends a powerful message that the government believes there is evidence of criminal conduct at the locations searched. The warrants were executed by Federal Bureau of Investigation agents who were armed, which can be quite intimidating. Using a search warrant rather than a subpoena ratchets up the pressure on those involved because prosecutors are not looking for their cooperation at this point, instead sending the message that this is going to be a fight.

Those who believe they may be targets of the investigation are on notice that prosecutors are serious, which means that if they want to cooperate in the case, the time to come forward is now, before prosecutors gather sufficient information to proceed without them. A search warrant is a warning shot across the bow of the hedge funds and those who were in their network that the Justice Department is getting closer to making a decision about whom to prosecute. . . .

I think the above gets it just right. Stay tuned.