Posted: 9:29a.m. IST, May 22, 2012
New York, May 22 (IANS) Prosecutors accused Indian American Rajat Gupta with throwing away his duties as the high-profile trial of the former director at Goldman Sachs on insider trading charges began here.
Gupta threw away his duties, he threw away his responsibilities, and he broke the law at the time the company was in crisis, Assistant US Attorney Reed Brodsky Monday told the Manhattan federal court in his opening statement.
Gupta broke the law when immediately after a Sep 23, 2008 Goldman Sachs board meeting, he tipped Galleon hedge-fund co-founder Raj Rajaratnam that Warren Buffett's Berkshire Hathaway Inc would invest $5 billion in the bank, he said.
He used those secrets to help his friend and Raj Rajaratnam sold his Goldman stock and made nearly a million dollars from Gupta's tip.
In turn, Gupta's attorney Gary Naftalis said his client was innocent of the allegations, that the prosecution's claims defy common sense and that no crimes were committed.
Even if there is evidence of leaks from Goldman Sachs, the tips didn't come from Gupta, he said. Rajaratnam had sources all over town, Naftalis said.
Naftalis said Gupta, orphaned as a teenager in India, rose to become one of America's most respected business leaders.
It defies common sense that in the twilight of an illustrious life, he'd decide to knowingly, willfully and deliberately to suddenly decide to become a criminal and do it for no benefit Naftalis said. He didn't turn into a criminal in the seventh decade of his life.
The defence lawyer said Gupta had no motive to tip Rajaratnam, who lost Gutpa's entire $10 million investment in Voyager and took $40 million in fees and redemptions from the fund without Gupta's knowledge, he said.
Naftalis said Galleon frequently traded in Goldman Sachs stock and that what the prosecutors have done in this case was cherry-pick trades supporting their theory. Gupta had perfectly legitimate reasons to speak to Rajaratnam, he said.
Witness testimony is expected to begin Tuesday with Caryn Eisenberg, who was one of Rajaratnam's secretaries, and Carolann Shields, an employee at McKinsey.
Also scheduled to testify this week are Byron D. Trott, a former Goldman banker who helped orchestrate Buffett's investment, and William George, a Goldman director and former chief executive of Medtronic.