During closing arguments in the largest hedge fund trading case in US history, a government lawyer has described former Goldman Sachs director Rajat Gupta as the "real fly" on the wall of the firm's boardroom.
Gupta, who has not been indicted in the criminal trial of Galleon Group founder Raj Rajaratnam, faces civil charges from the Securities and Exchange Commission for allegedly passing confidential information about Goldman Sachs to the defendant.
The defence had previously argued that Rajaratnam traded on Goldman Sachs based on information available in the public outlets like theflyonthewall.com, which provide financial news.
"You don't trade based upon a flyonthewall report," Assistant US Attorney Reed Brodsky told the jury yesterday.
"You trade based upon the real fly on the wall, Mr Gupta, the person who is in the Goldman board room, who knows what Goldman is really going to do," he added.
Gupta, an Indian-American, who was perched at the top of the financial world, has fallen from grace after the accusations levied against him.
Besides Goldman Sachs, he sat on the board of Proctor & Gamble and was invited to President Barack Obama's first state dinner hosted in honour of Prime Minister Manmohan Singh.
"Having a great reputation doesn't give you a free pass to violate the law," said Brodsky. "No-one is above the law."
Rajaratnam, 53, who has been charged with 14 counts of securities fraud and conspiracy, denies wrongdoing.
If convicted, he faces up to 20 years in prisons. Out of the 26 people arrested in the case, 19 have pleaded guilty.
Like Rajaratnam, Gupta, 62, has also denied wrongdoing.
Lloyd Blankfein, CEO of Goldman Sachs, has testified that Gupta had breached the firm's confidentiality policy.
In his closing arguments, Brodsky recapped Gupta's alleged tips to Rajaratnam. Using phone records, Brodsky showed that 16 seconds after Gupta learnt about a USD 5 billion investment in the firm by Warren Buffett's Berkshire Hathaway, he called Rajaratnam with the alleged tip.
Two minutes after the call on September 23, 2008, Brodsky said Rajaratnam made an order of $43 million worth of Goldman stock.
Gupta has also been accused of calling Rajaratnam in October 23, 2008 after learning that Goldman Sachs was losing $2 on a share, which led Rajaratnam to sell the firm's stock.
The lawyer reiterated the July 29, 2008 call in which Rajaratnam asks Gupta whether Goldman Sachs was considering acquiring a commercial bank. "Yeah there was this big discussion at the board meeting," he replied.
"Those calls say it all," Brodsky said.
