Hedge fund billionaire 'violated Goldman ethics'
Thursday 24 March 2011
Jurors in the trial of Raj Rajaratnam, the hedge fund executive accused of insider dealing, came face to face yesterday with one of Wall Street's most powerful bankers, as the Goldman Sachs chief executive, Lloyd Blankfein, took the witness stand.
At the urging of prosecutors, Mr Blankfein declared that one of the company's former board members, Rajat Gupta, had violated Goldman's ethics policies by passing details of board discussions to Mr Rajaratnam within hours of meetings wrapping up.
The court was played wiretapped conversations from 2008 in whichMr Gupta told Mr Rajaratnam that Goldman's board was debating whether to buy a high-street bank or an insurance company, to take advantage of plunging share prices at other companies during the credit crisis. On several occasions, prosecutors stopped the tapes to ask Mr Blankfein if he recalled those board talks and whether Mr Gupta was passing on accurate information.
Among a string of share trades through which Mr Rajaratnam's hedge fund, Galleon, is alleged to have netted $45m (£28m) in illegal profits, was the purchase of Goldman shares in September 2008 on the eve of an investment in Goldman by Warren Buffett. Mr Blankfein explained why the pending investment by Mr Buffett had been expected to boost Goldman's share price. "However shape we were in before, [investors] would think we were in better shape as a result of this," he said.
Mr Buffett is a "very, very shrewd and successful investor", he added, and his investment would be a positive sign to the markets at a time of financial crisis.
Later, in October that year, Mr Gupta called 23 seconds after the end of a board meeting to reveal details about unexpectedly poor quarterly results that the bank was about to publish. Galleon sold all of its Goldman shares.
Last month, the US Securities and Exchange Commission launched a so-called "administrative action" against Mr Gupta, but he has not been charged with criminal offences. Prosecutors have won guilty pleas from 19 people involved in insider dealing as a result of the Galleon inquiry, but Mr Rajaratnam says he never did more than normal investment research.
Mr Gupta is counter-suing the SEC, saying he denies accusations of wrongdoing and has been unfairly denied his right to a jury trial.
- 1 Planes go hybrid-electric in important step to greener flight
- 4 Hip hop is both racial and political, and for Iggy Azalea to suggest otherwise is insulting
- 5 Man hospitalised with pneumonia after downing eggnog at office Christmas party
Antonio Martin shooting: Black teenager may have tried to ambush patrolman, says police officer's lawyer
Orphan kangaroos spend Christmas without their parents
Northern Lights above Britain: Stunning Aurora Borealis illuminates Northumberland sky on Christmas Eve
New route to Mars could make manned mission much cheaper and easier
Isis 'did not shoot down Jordan war plane' before capturing pilot, says US
British actor Idris Elba cannot star as James Bond because he is black, says shock jock Rush Limbaugh
Rozanne Duncan: Ukip expels councillor for 'jaw-dropping' comments made in BBC TV interview
Germany anti-Islam protests: 17,000 march on Dresden against 'Islamification of the West'
Ukip member gets into Christmas spirit with Union Flag plea to Santa 'for our country back'
BBC director Danny Cohen: Rising UK antisemitism makes me feel more uncomfortable than ever
Alex Salmond has 'broken his word to the Scottish people' says Scottish Lib Dem leader
iJobs Money & Business
Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...
£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...
£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...
£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...