Rajat Gupta's lawyers say traders 'bragged' falsely about tipsters
Convicted hedge fund billionaire Raj Rajaratnam and traders at his Galleon Group ''exaggerated'' and ''bragged'' about having sources of inside information, lawyers for Indian American businessman Rajat Gupta have suggested.
Gary Naftalis, a lawyer for Gupta, former director of Goldman Sachs and Procter & Gamble, who's on trial on insider trading charges made the suggestion in Manhattan federal court Wednesday during cross-examination of a prosecution witness.
Questioning Michael Cardillo, an ex-Galleon portfolio manager who has pleaded guilty, Naftalis, asked about Rajaratnam and other Galleon traders' claims about their sources of illegal tips.
"Were there others at Galleon who claimed to have sources of inside information that they did not have?" he asked.
After an objection by prosecutors, US District Judge Jed S. Rakoff barred Cardillo from answering.
Cardillo testified last week that he traded on P&G stock in 2009 after learning that Rajaratnam had a "guy" on the company's board. Prosecution alleges Gupta was the person on the P&G board.
"At morning meetings with Raj Rajaratnam, did people talk about or exaggerate their sources of inside information from time to time?" Naftalis asked.
"There were rare occasions when it happened," Cardillo said.Naftalis also sought to discredit Cardillo by eliciting testimony that he had worn a recording device to try to capture incriminating information against a friend, days before that friend's wedding.
Cardillo, he suggested cut a deal with the government by pleading guilty to one count of securities fraud when he faced charges relating to five other stocks.
Prosecutors Wednesday introduced evidence that a key card assigned to Gupta was swiped into Galleon's offices at 11.36 a.m. on March 12, 2007, which according to Gupta's calendar was when he was to dial into a Goldman Sachs audit committee meeting to discuss its first-quarter earnings.
Prosecutors allege that 25 minutes after the audit committee meeting ended, Galleon funds bought 350,000 Goldman Sachs shares. The next day Goldman announced earnings that exceeded analyst estimates.