Gupta stood to profit with Rajaratnam: witness
By Grant McCool
NEW YORK (Reuters) - Former Goldman Sachs Group Inc board member Rajat Gupta stood to profit from investments he made in funds managed by now-imprisoned hedge fund founder Raj Rajaratnam, a witness testified at Gupta's insider-trading trial on Wednesday.
Whether Gupta, 63, actually profited is in dispute at the trial in District Court in New York. Gupta's lawyers contend he lost all of a $10 million investment with Galleon Group founder Rajaratnam and that Gupta, a multimillionaire, had nothing to gain financially by passing corporate secrets to the fund manager.
Gupta is charged with securities fraud and conspiracy. Prosecutors say he illegally leaked confidential information to Rajaratnam between March 2007 and January 2009 while serving on the boards of Goldman and Procter & Gamble. Rajaratnam was convicted of conspiracy and securities fraud last year and is serving an 11-year prison term.
Under questioning, former Galleon portfolio manager Isvari Mahadeva said the fund firm's records showed Rajaratnam, Gupta and a third money manager, Ravi Trehan, formed Voyager Capital Partners in 2005, with Gupta contributing $5 million.
She said that in 2007 Gupta had an option to invest an additional $5 million that could reap 10 percent in additional profit.
"I was told he chose to exercise the option," said Mahadeva, who worked for Galleon for 12 years until Rajaratnam was arrested in October 2009 in a broad crackdown on insider trading.
A defense lawyer, Robin Wilcox, asked Mahadeva whether she knew anything about Gupta profiting or if he got back his $10 million investment.
"No, no information," she said. Continued...