NEW YORK, (Reuters) - A judge Friday ordered an
evidentiary hearing over a U.S. government wiretap application
in the insider trading case of Galleon hedge fund founder Raj
Rajaratnam.

Lawyers for Rajaratnam last month asked Manhattan federal
court judge Richard Holwell to throw out wiretap evidence in
what U.S. prosecutors described as the biggest probe of insider
trading at hedge funds when they arrested him in October.

"Whether or not Rajaratnam will be able to prove by a
preponderance of the evidence that the government made
misstatements that were both reckless and material, he has at
least established good grounds" for an evidentiary hearing on a
March 7, 2008 government affidavit presented to another judge,
Holwell said in a written order.

The affidavit was related to a request for permission to
listen to the hedge fund manager's phone conversations.

He scheduled the hearing for Sept. 7.

Separately, the judge dismissed motions by Rajaratnam and
principal co-defendant Danielle Chiesi to strike one count of
the indictment against them and other charges they said the
government had added. Chiesi is a former trader at New Castle
Funds LLC.

The trial of Rajaratnam and Chiesi is scheduled for Jan.
17.

The case is USA v Raj Rajaratnam and Danielle Chiesi, U.S.
District Court for the Southern District of New York, No.
09-01184.
(Reporting by Grant McCool. Editing by Robert MacMillan)