Fight over Goldman's Blankfein at Rajaratnam trial

Reuters News
Posted: Mar 23, 2011 9:24 AM
Fight over Goldman's Blankfein at Rajaratnam trial

NEW YORK (Reuters) - Goldman Sachs Group Inc Chief Executive Lloyd Blankfein was expected to testify as early as Wednesday in the Raj Rajaratnam insider trading trial, but lawyers are set first to battle over what he can and cannot say.

Blankfein's expected appearance as a government witness intensifies the focus on what is already Wall Street's biggest insider trading trial in two decades.

A hearing is scheduled for 9:30 a.m. EDT before U.S. District Judge Richard Holwell in Manhattan federal court over Blankfein's testimony. Blankfein could testify after that hearing, though no official announcement has been made about when he is set to appear on the witness stand.

Prosecutors have accused the Sri-Lankan born Rajaratnam, a one-time billionaire, of illegally making $45 million from 2003 to 2009 based on tips from insiders, some of whom were highly placed executives in corporate America.

Galleon Group founder Rajaratnam, 53, has said his trades were based on his own research and publicly available information. He has vowed to clear his name at trial.

Prosecutors have asked the judge to block Rajaratnam's lawyers from cross-examining Blankfein on whether Goldman bears responsibility for the 2008 financial crisis, or is the subject of any Department of Justice or SEC investigations.

They said such information is irrelevant to the trial, and could create unfair prejudice against Blankfein's testimony.

Prosecutors said they plan to call Blankfein to testify about Rajat Gupta, a former Goldman director accused this month by the U.S. Securities and Exchange Commission of passing confidential information about the Wall Street bank to Rajaratnam.

Prosecutors said they want Blankfein to testify about Gupta's role on the board and his duties of confidentiality. Goldman has not been accused of wrongdoing.

The case is U.S. v. Rajaratnam, U.S. District Court, Southern District of New York, No. 09-01184.

(Reporting by Lauren Tara LaCapra, Grant McCool and Jonathan Stempel, editing by Dave Zimmerman)