Former Goldman Sachs Group board member Rajat Gupta invoked his Fifth Amendment right not to incriminate himself when the US Securities and Exchange Commission (SEC) sought to question him, a prosecutor said.
Shortly before the start of proceedings yesterday in the insider-trading trial of Galleon Group co-founder Raj Rajaratnam, Assistant US Attorney Reed Brodsky asked whether the defence intended to introduce into evidence a submission that Gupta made to the SEC. Defence attorney John Dowd said he didn’t plan on telling jurors about the so-called Wells submission.
“In that Wells submission, Gupta took the Fifth Amendment when he spoke to the SEC,” Brodsky told US District Judge Richard Holwell. Gupta “wasn’t deposed when the SEC asked for his deposition,” Brodsky said.
Gupta’s name has been mentioned almost daily at Rajaratnam’s federal court trial in Manhattan. Yesterday, Goldman Sachs Chief Executive Officer Lloyd Blankfein testified that he presented confidential information at board meetings attended by Gupta. Prosecutors claim Gupta leaked some of that information to Rajaratnam.
Rajaratnam, 53, is on trial in the largest crackdown on hedge-fund insider trading in US history. The Sri Lankan-born money manager is accused of making $45 million from tips leaked by corporate insiders including Gupta. He denies wrongdoing, saying he based trades on research.
Buffett’s investment
Blankfein testified yesterday that Gupta had confidential information about Warren Buffett’s $5 billion investment in Goldman Sachs in October 2008, Goldman’s earnings projections for that quarter and strategic discussions the firm had about acquiring a commercial bank or insurance company in late June 2008. Prosecutors allege that Gupta passed the tips to Rajaratnam, allowing him to make about $1 million for Galleon in September 2008 and avoid millions in losses the next month.
“We are a public company,” Blankfein said. “We don’t want information about our company to get outside before the time is appropriate. There is a process and a protocol for speaking to the outside world.”
For a second time in the trial, which began March 8, jurors heard a July 29, 2008, telephone call, secretly recorded by the Federal Bureau of Investigation (FBI), in which Gupta told Rajaratnam that the Goldman board had discussed acquiring a commercial bank or an insurance company.
“Have you heard anything along that line?” Rajaratnam asked Gupta during the call. “Yeah,” Gupta replied, “This was a big discussion at the board meeting.”
On cross-examination that lasted about an hour, John Dowd, Rajaratnam’s lawyer, questioned Blankfein about a Goldman Sachs press release announcing that Gupta wouldn’t stand for re- election as a board member in March 2010.
