First wiretap played at Gupta insider-trading trial

Wed May 23, 2012 6:41pm EDT
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By Grant McCool

NEW YORK (Reuters) - A New York jury on Wednesday heard former Goldman director Rajat Gupta on a FBI wiretap casually discussing business with Raj Rajaratnam, the now-imprisoned hedge fund founder he is accused of tipping off about boardroom secrets.

The 23-minute phone call on July 29, 2008 has no direct connection to the criminal charges against Gupta, but prosecutors played it to jurors to show the cozy relationship he had with Galleon Group founder Rajaratnam and their investments together.

"By the way, on that I want you to keep, us to keep having the dialogue as to what ... you know how I can be helpful in Galleon International. By the way not Galleon International, Galleon Group," Gupta told Rajaratnam, according to the court transcript of the conversation.

Their discussion begins with Rajaratnam telling Gupta he heard a rumor that "Goldman might look to buy a commercial bank" and Gupta's response is that "this was a big discussion at the board meeting." Investment bank Goldman did not acquire any bank.

The conversation goes on with Gupta seeking career and business advice from Rajaratnam. While the tape was being played to the jurors, Gupta sat at the defense table leafing through the 27-page transcript.

Gupta, 63, is accused of providing Rajaratnam with boardroom secrets between March 2007 and January 2009 while he was a director of Goldman Sachs Group Inc and Procter & Gamble Co. Gupta is also a former head of McKinsey & Co management consultancy.

Galleon had $7 billion under management at its peak and was wound down after Rajaratnam's October 2009 arrest in a broad U.S. crackdown on insider trading.

Part of the wiretap of Rajaratnam's cell phone was also played at his trial a year ago when a jury convicted him of 14 criminal charges. He was sentenced in October to 11 years in prison.   Continued...

Rajat Gupta, a former director of Goldman Sachs Group Inc., exits Manhattan Federal Court in New York February 7, 2012. REUTERS/Brendan McDermid