NEW YORK (AP) — The chief executive of Goldman Sachs told a jury at an insider trading trial Wednesday that a former board member violated the company's confidentiality policies when he discussed board secrets with a then-billionaire hedge fund boss.
CEO Lloyd Blankfein listened as prosecutors played snippets of a 2008 telephone conversation between Galleon founder Raj Rajaratnam and ex-board Goldman member Rajat Gupta and then said that Gupta had broken the rules in the chat.
Prosecutors called Blankfein as a witness in the trial of Rajaratnam, who is accused of making more than $50 million through illegal trades by extracting secrets from other financial professionals and employees at public companies. Rajaratnam has said through his lawyer that he only traded based on information that was already known.
Prosecutors have said Gupta called Rajaratnam, founder of the Galleon funds, twice to give him tips. They said Rajaratnam then traded hundreds of thousands of shares of Goldman Sachs stock.
Gupta has not been charged criminally in what prosecutors say is the largest hedge fund insider trading case in history.
A spokesman for Gupta's attorney said Wednesday there was no comment on the court proceedings. The lawyer, Gary Naftalis, has said the allegations about Gupta were "totally baseless."
The Securities and Exchange Commission has filed civil charges against Gupta, saying he tipped Rajaratnam seven minutes before the stock markets closed on Sept. 23, 2008, causing Rajaratnam to buy $175,000 shares of Goldman stock within a minute of receiving the tip.
A prosecutor asked Blankfein about a board meeting that day, when the board approved an offer from Warren Buffett's Berkshire Hathaway to invest $5 billion in the investment giant.