Gupta defense takes aim at trader's credibility

Wed May 30, 2012 5:32pm EDT
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By Grant McCool

NEW YORK (Reuters) - Lawyers defending former corporate director Rajat Gupta on insider-trading charges sought on Wednesday to discredit a former hedge-fund trader who agreed to wear an FBI recording device and testify against others.

Gupta, 63, is accused of providing his onetime friend and business associate, Galleon hedge fund founder Raj Rajaratnam, with boardroom secrets between March 2007 and January 2009 while he was a director at Goldman Sachs Group Inc and Procter & Gamble.

Gupta says the prosecution's case is circumstantial and he has pleaded not guilty. The Manhattan federal court trial started on May 21 and is expected to last three weeks.

Defense lawyer Gary Naftalis questioned former Galleon trader Michael Cardillo for several hours, trying to portray him as someone who was seeking leniency for his cooperation with investigators. Cardillo, 35, pleaded guilty to insider-trading related charges in January 2011 but has yet to be sentenced.

The defense lawyer also sought to portray to the jurors that Galleon was a place where money managers exaggerated their contacts and boasted about getting inside information. One key defense argument is that the now-imprisoned Rajaratnam had a host of sources who could have given him tips about companies.

At one point, Naftalis asked Cardillo about George Soros, the hedge fund billionaire.

"You heard, did you not, when you were at Galleon, that Mr. Rajaratnam claimed that he was giving Intel numbers, the numbers -- inside information about Intel to George Soros, do you remember hearing that?" Naftalis asked Cardillo.

The trader responded: "I remember something about Intel and Soros. I don't remember Raj being a part of it."   Continued...

Rajat Gupta, a former Goldman Sachs Group Inc and Procter & Gamble board member, arrives at Manhattan Federal Court in New York, May 29, 2012. REUTERS/Andrew Burton