Flurry of arguments starts Gupta insider-trading trial

Mon May 21, 2012 7:07pm EDT
 
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By Grant McCool

NEW YORK (Reuters) - Former Goldman Sachs director Rajat Gupta "threw away his duties" by divulging bank secrets to hedge fund manager Raj Rajaratnam, a U.S. prosecutor said at the start of Gupta's insider-trading trial on Monday.

The defense punched back that the government had no direct evidence.

Gupta, 63, once a boldface name in business and charity circles, is the most prominent corporate executive charged in a U.S. government crackdown on insider trading in recent years. Galleon Group founder Rajaratnam, an erstwhile friend and business associate of Gupta, was convicted of insider trading a year ago and is serving an 11-year prison term.

Gesturing with his left arm toward Gupta in a Manhattan federal courtroom, prosecutor Reed Brodsky said the case "is about this man" and "how he violated his duties and abused his position as a corporate insider."

As Brodksy delivered his opening argument to the jury, Gupta stared at him, barely moving in his seat at the defense table. His wife, Anita, and their four adult daughters sat in the front row, also absorbed by the proceedings.

During his turn at the podium, Gupta's lawyer Gary Naftalis painted a very different picture of Gupta, who was born in India and attended Harvard Business School before heading to McKinsey & Co management consultancy.

Naftalis repeatedly told the jury that there was "no real, hard, direct evidence" against him despite 10 months of FBI wiretaps on Rajaratnam's phones in 2008 and 2009.

"Rajaratnam had sources all over town giving him information. He even had sources at Goldman Sachs," Naftalis told the 12-member jury, which includes a nurse, an elementary teacher, and two executives.   Continued...

 
Rajat Gupta, a former Goldman Sachs Group Inc and Procter & Gamble board member, arrives at Manhattan Federal Court in New York May 21, 2012. Jury selection is set to begin in the trial of Gupta who is accused of leaking stock secrets to his friend Raj Rajaratnam. REUTERS/Eduardo Munoz