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Ex-Goldman man faces insider dealing charges

The great and the good of the Indian business community may be fiercely protesting his innocence on the web and in interviews, but a jury of ordinary New Yorkers will decide the fate of Rajat Gupta, the former Goldman Sachs board member whose trial for insider trading got under way yesterday.

Mr Gupta, right, is the most senior businessman to face charges after a huge sweep of insider trading arrests in the US, and prosecutors signalled they will rely on wiretapped conversations in which he is alleged to have passed on boardroom secrets to the hedge fund manager Raj Rajaratnam, who is already serving 11 years for insider dealing.

Jury selection began in a Manhattan courthouse yesterday, and potential jurors were told the case could last up to a month. Mr Gupta was accompanied to court by his wife, Anita, and their four adult daughters. They heard him described by Assistant US Attorney Reed Brodsky as having "violated his duties and abused his position as a corporate insider".

In its opening statement, the defence said the case against Mr Gupta was "based on speculation, guesswork and suspicion of what might have happened".

Potential witnesses include other Goldman directors, including the chief executive Lloyd Blankfein, and A G Lafley, the former chairman of Procter & Gamble, where Mr Gupta was also a board member.

Mr Blankfein testified last year at the trial of Rajaratnam that Mr Gupta had violated Goldman's ethics policies by passing details of board discussions in 2008. Once, Mr Gupta called Rajaratnam 23 seconds after the end of a board meeting to reveal details about unexpectedly poor quarterly results the bank was about to publish. Galleon, Rajaratnam's hedge fund, sold all of its Goldman shares. Also played at trial was the tape of Rajaratnam grilling Mr Gupta about whether the Goldman board had discussed acquiring the bank Wachovia or an insurance company. "Have you heard anything along that line?" Rajaratnam asked. "Yeah," Mr Gupta responded. "This was a big discussion at the board meeting."

Mr Gupta's arrest last year was an extraordinary reversal for a man with impeccable business credentials. Now 63, he has been in the US since the Seventies. He rose to lead the consulting powerhouse McKinsey as managing director. He has denied the charges.