Gupta 'Abused' Role, Prosecutor Says In Closing Argument
By Patricia Hurtado and David Glovin - Jun 13, 2012 10:22 AM ET
Former Goldman Sachs Group Inc. (GS) director Rajat Gupta “abused his position as a corporate insider” by leaking secret tips, a prosecutor said as closing arguments in the insider-trading trial began.
At the start of almost six hours of summations scheduled for today, Assistant U.S. Attorney Richard Tarlowe told jurors in Manhattan federal court there is “overwhelming evidence” that Gupta passed secret information to Galleon Group LLC co- founder Raj Rajaratnam, the convicted hedge fund manager now serving an 11-year sentence in federal prison.
“Gupta abused his position as a corporate insider by providing secret information,” Tarlowe said. Those leaks allowed “Rajaratnam and his criminal associates at Galleon” to “cash in” and earn millions of dollars through illicit trades.
Gupta, 63, who ran McKinsey & Co. from 1994 to 2003, is on trial for allegedly leaking secret tips to Rajaratnam, 64, about New York-based Goldman Sachs and Procter & Gamble Co. (PG), where Gupta was also a director.
Gupta has pleaded not guilty. Defense attorney Gary Naftalis has said that others tipped Rajaratnam, and that some trades were lawful. Naftalis is set to give his closing argument later this morning, which will be followed by a rebuttal from prosecutors. Jury deliberations may begin by 5 p.m. today.
Alleged tips by Gupta included information on a $5 billion Berkshire Hathaway Inc. (BRK/A)investment in Goldman Sachs on Sept. 23, 2008, and about Goldman Sachs losses in the fourth quarter of 2008. Prosecutors also said Gupta told Rajaratnam that Cincinnati-based P&G planned to sell its Folgers Coffee unit to J.M. Smucker Co.
Tarlowe began his presentation today by focusing on trades related to Omaha, Nebraska-based Berkshire. He noted that Galleon bought more than 200,000 Goldman Sachs shares beginning around 3:54 p.m. on Sept. 23, 2008, after Rajaratnam received an “urgent” call from a man Tarlowe alleged was Gupta.
There was just one call to Rajaratnam’s direct line in the last 10 minutes of the trading day, Tarlowe said.
“And that call was from Gupta,” the prosecutor said, adding: “That evidence is devastating.”
The prosecutor replayed for jurors a Sept. 24 wiretapped telephone conversation in which Rajaratnam tells an associate that he was told at 3:58 p.m. that “something good might happen to Goldman.”
The prosecutor also repeated a theme that prosecutors argued in their opening statement on May 21 — that Gupta “betrayed the trust” placed in him by Goldman Sachs and P&G by passing along confidential corporate data.
Gupta leaked information because he wanted Rajaratnam’s help with a new fund he was starting and sought a slice of the “extraordinary profits” at Galleon, Tarlowe said. Gupta was to become chairman of Galleon’s international fund, according to the prosecutor.
The case is U.S. v. Gupta, 11-cr-00907, U.S. District Court, Southern District of New York (Manhattan).
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