Gupta violated Goldman's code of conduct: Blankfein

Betwa Sharma
New York, Mar 24 (PTI) Indian American Rajat Gupta, a
former director at Goldman Sachs, had violated the firm's code
of conduct by disclosing details from a 2008 board meeting to
hedge fund manager Raj Rajaratnam, the main accused in the
largest hedge fund insider trading case to hit US courts, the
company CEO Lloyd Blankfein has testified.
Gupta, who is accused by the Securities and Exchange
Commission (SEC) of passing insider information to Rajaratnam,
denies wrongdoing and has sued the US regulator.
The SEC has alleged that Gupta tipped off
Rajaratnam about an imminent USD 5 billion dollar investment
in Goldman by Warren Buffett in 2008, and that he also
provided the quarterly earnings of Goldman and Proctor and
Gamble, where he also served as a director.
Last week, prosecutors played a secretly recorded
phone conversation on July 25, 2008 in which Gupta tells the
Galleon Group founder that the firm is discussing buying
Wachovia or American International Group (AIG).
"This was a big discussion at the board meeting,"
Gupta said during the call. It was a divided discussion."
Blankfein replied "yes" when he was asked by the
prosecution whether Gupta violated confidentiality policy in
the call about the possible acquisition.
He read out guidelines, which the directors were
required to adhere to, including, "directors must maintain the
confidentiality of all information so entrusted to them."
Blankfein said that besides the confidentiality
policy, directors also had the duty of putting the interest of
the firm first.
When asked if Gupta had violated this duty, he
responded, "my sense of it… yes."
During cross-examination, Blankfein said that the
Galleon's relationship with Goldman Sachs was an important
one.
"I know it was a prominent client for Goldman Sachs,"
he said.
When asked whether Gupta was viewed as "highly
esteemed individual" in the business world, Blankfein said
"yes".
Rajaratnam is accused of making more than USD 45m
by illegally trading on insider information.
His lawyers say that Rajaratnam conducted his
business based on information that was already in the public
domain and through research.
Out of the 26 people arrested in this case, 19
have pleaded guilty.
The 53-year-old Sri Lankan-born billionaire, however,
denies any wrongdoing.
He could face up to 20 years in prison, if found
guilty.
Earlier in the day, Rajaratnam's defence lawyer,
John Dowd, told the judge that he would not question Blankfein
about other legal proceedings involving Goldman Sachs.
Dowd tried to convince the jury that the
information Rajaratnam and Gupta talked about was already in
the media.