Gupta on Rajaratnam's "important people" list-witness

Reuters News
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Posted: Jun 07, 2012 3:03 PM
Gupta on Rajaratnam's "important people" list-witness

By Grant McCool

NEW YORK (Reuters) - Former Goldman Sachs director and McKinsey & Co executive Rajat Gupta was on a list of "important people" that now-imprisoned hedge fund manager Raj Rajaratnam was willing to be disturbed to take their phone calls, his onetime secretary testified at Gupta's insider-trading trial on Tuesday.

The former Galleon Group employee Caryn Eisenberg also told the Manhattan federal court jury that she saw Gupta "many times" in the firm's 34th floor Madison Avenue office in 2008 and 2009.

Eisenberg is the first trial witness called by prosecutors to establish the relationship between Gupta and Rajaratnam. The trial began on Monday with opening arguments.

Eisenberg was employed as Rajaratnam's executive assistant from January 2008 until December 2009, two months after her boss's arrest in a broad government crackdown on insider trading.

Gupta, 63, is the most prominent corporate figure indicted and he denies the charges, arguing the prosecution has no direct evidence such as the dozens of wiretaps used to convict Rajaratnam a year ago.

The former secretary also testified that she could not identify the voice of the person who called on September 23, 2008 minutes before the stock market closed. The date is key to government charges against Gupta that he leaked word of Warren Buffett's $5 billion investment in Goldman Sachs Group Inc before it was made public at the height of the financial crisis.

Eisenberg said the call was from "one of the men who frequently called" and that "it was urgent."

She said that her former boss Rajaratnam had instructed her "not to disturb him with any calls unless they are on a list of people considered important" so on that occasion, she did put the phone call through to Rajaratnam.

Gupta is on trial on charges of tipping Rajaratnam with confidential information between March 2007 and January 2009 while serving on the boards of Goldman Sachs and Procter & Gamble. He also spent a 34-year career at management consultancy McKinsey & Co, including nine years as its global head.

The jury, which includes an elementary school teacher, a nurse and a professor, saw the handwritten list of five names - taken from Eisenberg's notebook - displayed on screens in the jury box. Five other names were added during her employment.

Under the title "important people" Gupta's name was on it.

Two people who testified against Rajaratnam at his trial last year after pleading guilty were also on the list. They were former Intel Corp executive Rajiv Goel and McKinsey consultant Anil Kumar.

The charges of securities fraud and conspiracy could lead to a lengthy prison term for Gupta if he is convicted at the trial, which is expected to last about three weeks. However, it is unlikely to be as lengthy as the 11 years handed to Rajaratnam, who was found guilty on 14 criminal charges.

One of the allegations is that on September 23, 2008, Gupta called Rajaratnam 16 seconds after a special Goldman board meeting approved the $5 billion investment by Buffett's Berkshire Hathaway Inc. They said Rajaratnam then ordered his traders to buy Goldman stock with just minutes left in the trading day, reaping illegal profits.

The case is USA v Gupta, U.S. District Court for the Southern District of New York, No. 11-907.

(Reporting By Grant McCool; Editing by Tim Dobbyn)