(Reuters) - Secretly recorded conversations may be used as evidence in the criminal trial of Galleon Group hedge fund founder Raj Rajaratnam on insider trading charges, a federal judge ruled on Wednesday.

The ruling is a big victory for U.S. prosecutors. The wiretaps are considered key evidence that the government will use in trying to convince a jury that Rajaratnam engaged in a massive insider trading scheme.

U.S. District Judge Richard Holwell said the government was allowed to use wiretaps to investigate a fraudulent insider trading scheme using interstate wires, although the applicable law does not specifically authorize wiretaps to investigate insider trading alone.

Rajaratnam, 53, had asked the judge to suppress the evidence, arguing that investigators misled another judge into approving the FBI's wiretap application in March 2008.

The case is U.S. v Rajaratnam et al, U.S. District Court, Southern District of New York, No. 09-01184.

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