Lloyd Blankfein, chief executive officer of Goldman Sachs Group Inc., said former Goldman board member Rajat Gupta violated the firm’s confidentiality policies as he testified for the prosecution at Galleon Group LLC co- founder Raj Rajaratnam’s insider-trading trial.
Blankfein took the stand before U.S. District Judge Richard Holwell in Manhattan federal court at about 10:30 this morning. He said Gupta violated Goldman policies when he revealed details of the firm’s strategic planning discussions to Rajaratnam in a wiretapped phone call in July 2008.
Prosecutors called Blankfein to help build their case that Rajaratnam traded on inside information about Goldman Sachs he obtained from Gupta, then a Goldman board member. On the stand, Blankfein identified a photo of Gupta and said Gupta was on Goldman’s governance, audit and compensation committees.
John Dowd, Rajaratnam’s lawyer, said he doesn’t intend to question Blankfein about any pending investigations related to Goldman Sachs. He said he may recall Blankfein later in the trial as a witness for the defense. The parties didn’t address in today’s hearing whether Dowd may question Blankfein about Goldman’s role in the 2008 financial meltdown.
Prosecutors questioned former Intel executive Rajiv Goel for about 45 minutes this morning, then interrupted Goel’s testimony to question Blankfein.
Rajaratnam, 53, is in the third week of his trial in the largest crackdown on hedge-fund insider trading in U.S. history. The Sri Lankan-born money manager is accused of making $45 million from tips leaked by corporate insiders and hedge fund traders. He denies wrongdoing, saying he based his trades on research.
Rajaratnam got a tip from Gupta about a $5 billion investment in the firm by Warren Buffett’s Berkshire Hathaway Inc., and Gupta allegedly passed the news immediately to Rajaratnam, who bought shares, prosecutors told the jury in opening statements.
The government also alleged that Gupta passed tips to Rajaratnam about Goldman Sach’s quarterly earnings and financial results for Procter & Gamble Co., where Gupta was also a director.
The case is U.S. v. Rajaratnam, 1:09-cr-01184, U.S. District Court, Southern District of New York (Manhattan).
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