The Street Fighter

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Those traders may not have caused the meltdown, but since he arrived on the job in August 2009, Bharara has been targeting what he calls Wall Street's culture of greed. "There was a creeping culture of corruption in our politics and also in Wall Street and in business generally," he says. Bharara is aiming high, making arrests so far up Wall Street's food chain that hedge-fund bosses may be wondering about picking up the phone.

One of those arrested was Anthony Chiasson, high-flying co-founder of Level Global, whose trades, say the feds, made $72.6 million in profits for the firm over more than two years. Another is Raj Rajaratnam, the former boss of the $7 billion hedge fund Galleon Group, who is in jail for securities fraud and conspiracy while he appeals his 11-year sentence, which was delivered last October after a lengthy trial. Bharara has also charged former McKinsey & Co. CEO Rajat Gupta--like him a first-generation immigrant from India who made it in the U.S.--with securities fraud. And having arrested John Horvath, who worked at Sigma Capital, a unit of SAC Capital Advisors, Bharara has now alleged illegal activity inside the $14 billion hedge fund of Wall Street biggie Steven Cohen. Neither Cohen nor his firm has been accused of any wrongdoing. "He's bringing a lot of very high-profile cases," says his predecessor in the job, former New York City mayor Rudolph Giuliani, who says Bharara's done a "great job."

To his critics, Bharara's prosecutorial reach is perilous to innocent bystanders. The definition of insider trading has never been clear. And the mere appearance of Bharara has been enough to send investors fleeing (with their cash) from hedge funds once they become his target. Level Global is finished; FrontPoint Partners, once a $7 billion firm, was reduced to a shell after one of its analysts was busted. At the same time, political pressure for more arrests is mounting. An election-year posse is being formed in Washington to try to round up the perpetrators of the Great Recession. President Barack Obama unveiled during his State of the Union address in January a new task force to investigate mortgage fraud by big banks.

To hear him tell it, Bharara is after something bigger than just arrests. In his insider-trading cases, Bharara says he is not targeting hedge funds but rather leveling the playing field for all investors at a time when fairness is vitally important. "Insider trading tells everybody at precisely the wrong time that everything is rigged," he says, "and only people who have a billion dollars and have access to and are best friends with people who are on boards of directors of major companies--they're the only ones who can make a true buck." Ultimately, though, justice comes in court, after the perp walks and the press conferences are long forgotten, and it is there that Bharara's choice of cases--and his tactics--will be judged.

The Third Wave