As Gupta Insider Trading Trial Begins, Prosecution to Call First Witness

WNYC News on May 22, 2012 released the following:

By WNYC Newsroom

“Federal prosecutors are expected to call their first witness in the case against former Goldman Sachs board member Rajat Gupta on Tuesday.

The witness list in the case reads like a who’s who in business, including Warren Buffet and Lloyd Blankfein. But the prosecution is expected to call Gupta’s former secretary, Caryn Eisenberg to the stand first. Other possible witnesses for the prosecution on Tuesday include an FBI agent and a former co-worker of Gupta’s from the consulting firm McKinsey.

Prosecution and defense teams have made their opening arguments in the trial of the prominent NY businessman on Monday.

Government lawyer said they have Gupta’s phone records that show he illegally passed corporate secrets to his friend, Raj Rajaratnam, who ran a hedge fund. Assistant U.S. Attorney Reed Brodsky told jurors in opening statements that Gupta “threw away his duties, threw away his responsibilities and broke the law.”

Brodsky recounted how former billionaire Rajaratnam earned close to $1 million after Gupta told him in a phone call that Goldman had received an offer from Warren Buffett’s Berkshire Hathaway to invest $5 billion in the banking giant in 2008.

“That was trading on secrets coming from someone who actually knew what was happening in the confines of the board room,” Brodsky said. “That’s called insider trading and that’s a serious crime.”

Gupta’s lawyer said the prosecution’s evidence is like a cropped photograph. It doesn’t tell the whole story, it’s circumstantial. He questioned why a rich and successful businessman take this risk.

Defense attorney Gary P. Naftalis told jurors that Gupta “never defrauded anybody. He never cheated anybody.” Naftalis argued the call harms rather than helps the government’s case because no unusual trading occurred around that time, and the men were discussing information already reported by analysts and journalists.

The 63-year-old Gupta was a former Goldman Sachs board member, and also a former board member at Procter & Gamble Co.

Gupta has pleaded not guilty to conspiracy and securities fraud charges that carry a potential for more than 100 years in prison.”


Douglas McNabb – McNabb Associates, P.C.’s
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