* Richard Holwell leaves bench to form new law firm

* Handed down record prison term for insider-trading

By Grant McCool

NEW YORK, Feb 7 (Reuters) – Presiding over the
high-profile insider-trading trial and sentencing of Galleon
hedge fund founder Raj Rajaratnam was “personally challenging,”
says Richard Holwell, who left the federal judiciary to start a
new law firm on Tuesday.

One-time high flying billionaire Rajaratnam was convicted in
a sweeping jury verdict on 14 charges in federal court in New
York last May. Holwell sentenced him in October to serve 11
years in prison, the longest term on record for insider trading.

“I personally found it a difficult court case because it had
to be dealt with both on an individual level and, obviously, the
case had implications for the financial markets and the social
fabric in general,” Holwell, who is starting a litigation
boutique in Manhattan with two other lawyers, said in a
telephone interview.

“You couldn’t really overlook where it was and it was always
a constant struggle to strike the right balance on how one
approached the case. In that sense, it was personally
challenging.”

Holwell, 65, was nominated by President George W. Bush and
appointed to U.S. District Court in Manhattan in 2003. On
Tuesday, he acknowledged it was rare for a judge appointed for
life to stand down and return to private practice.

“I felt just a little itch and wanted to try and get back in
the courtroom from the other side of the rail,” Holwell said.

He said he started discussions about forming a new firm in
the late summer and early fall of 2011.

Holwell presided over many complex financial cases during
his time as a judge. Among his notable rulings was one allowing
the government’s wiretap evidence in the Rajaratnam case, but
not before presiding over a special four day-long evidentiary
hearing to allow Rajaratnam’s lawyers to challenge them.

One of Holwell’s last written opinions, published on Monday,
was in the Rajaratnam case. It was largely a mechanical ruling
describing how he used the federal sentencing guidelines to
calculate the sentence.

A news release issued on behalf of Holwell and his new law
partners said they would focus on complex commercial litigation.
The new firm will be known as Holwell Shuster & Goldberg.

Holwell is rejoining other prominent New York-based trial
lawyers Michael Shuster and Daniel Goldberg, whom he mentored at
White & Case firm in New York before he became a judge.
Holwell was in private practice with White & Case from 1971
until 2003.

Separately on Tuesday, a behind-the-scenes figure in the
government’s crackdown on insider-trading moved from the office
of the Manhattan U.S. attorney to a private law firm.

Christopher Garcia, Chief of the Securities & Commodities
Fraud Task Force at the United States Attorney’s Office for the
Southern District of New York, will join the firm Weil Gotshal
and Manges as a litigation partner, according to a statement by
the law firm.

As a prosecutor, Garcia supervised prosecutors, law
enforcement agents, and staff in securities fraud
investigations, trials, appeals, and other litigation, including
the insider trading cases involving Galleon Group, expert
network firms and hedge funds.