Published November 20, 2014
A former Goldman Sachs board member is planning to testify on his own behalf at his insider trading trial, the judge and lawyers revealed Friday, just days before he was expected to take the stand.
U.S. District Judge Jed S. Rakoff announced Rajat Gupta's plans after the jury had gone home for the day, saying the testimony was discussed earlier in the day during a sidebar conversation.
The judge had insisted that the defense reveal its plans so prosecutors would have time to prepare their questions before testimony likely begins on Tuesday.
Gupta's lawyer, Gary Naftalis, still hedged, saying the former board member at Goldman and Procter & Gamble Co. was "highly likely" to testify.
Gupta is charged with conspiring to reveal board secrets that enabled one-time billionaire and hedge fund founder Raj Rajaratnam to make lucrative trades for his $7 billion hedge fund. Rajaratnam was convicted of insider trading charges at trial last year and is serving an 11-year prison sentence.
The revelation came after Goldman chief executive Lloyd Blankfein completed three days of testimony. He was the government's final witness.
Blankfein gave both sides just enough material to support closing arguments, expected to occur as early as Wednesday.
Over two days, the government elicited answers from Blankfein to support its argument that the kind of Goldman board information the government says he gave his hedge fund trading friend was secret and should have remained so.
Naftalis poked Blankfein repeatedly Friday with questions aimed at showing that information Gupta discussed with Rajaratnam in a July 2008 telephone call was already widely known. Most of the questions were deflected by objections from prosecutors.
Like any good boxer, Naftalis landed a few, drawing just enough from Blankfein to support his arguments that there was nothing wrong if Gupta was talking about subjects that were already being discussed in analyst reports and news articles.
"Items your senior management disclosed to analysts are no longer confidential under Goldman's confidentiality policy?" Naftalis asked.
"Yes," Blankfein answered.
Blankfein also conceded it was possible that he disclosed to his board at a meeting in October 2008 that Goldman was losing money 10 days before the company announced publicly that it was going to report its first loss since it became a public company.
Prosecutors have claimed that Gupta hurried to feed Rajaratnam news that Goldman was going to receive a $5 billion investment from Warren Buffett's Berkshire Hathaway and that Goldman was going to surprise analysts and investors by reporting its first loss.