In its closing arguments in the largest hedge fund insider trading case in US history, the defence has denied allegations that former Goldman Sachs Inc director Rajat Gupta passed insider tips to Galleon Group founder and main accused Raj Rajaratnam.
John Dowd, Rajaratnam's lawyer, asked the jury why Gupta, 62, would risk his entire career and reputation for nothing.
"Rajat Gupta did not receive anything. Rajaratnam did not give him anything," Dowd said.
During the rebuttal, US Attorney Jonathan Streeter said out that Gupta was an investor in Galleon's GB Voyager Multi-Strategy Fund, a fund that included assets from other Galleon funds.
"He stood to benefit if Raj makes more money," he said. Streeter told the jury that Judge Richard Holwell in his legal directions would tell them that benefits do not always have to be tangible but could also include making useful contacts or a favour returned down the road.
Rajaratnam, 53, who has been charged with 14 counts of securities fraud and conspiracy, has maintained his denial of wrongdoing.
If convicted, he faces up to 20 years in prison. Out of the 26 people arrested in the case, 19 have pleaded guilty.
Gupta, has not been charged in the criminal case but faces civil charges from the US Securities and Exchange Commission for allegedly passing confidential information about Goldman Sachs to the defendant.
These include telling Rajaratnam in July 2008 that Sachs was considering acquiring a commercial bank, an alleged tip on a $5 billion investment in the firm by Warren Buffett's Berkshire Hathaway in September 2008, and allegedly disclosing in October 2008 that Goldman Sachs was losing $2 on each share, which led Rajaratnam into selling the firm's stock.
Dowd insisted that Gupta had not breached Goldman's confidentiality agreement but Streeter shot back, saying that Lloyd Blankfein, chief executive officer of the firm, had testified that Gupta had broken the rules.
Rajaratnam's trading, Dowd said, was based on public information and the secretly recorded phone calls between Gupta and Rajaratnam, which the prosecution previously played, had been taken out of context.
The defense lawyer said that US government's Troubled Asset Relief Program, commonly referred to as TARP, had been good for the financial sector and Blankfein had testified that TARP had benefitted Goldman Sachs more than Buffet's investment.
Streeter reiterated that while Rajaratnam may have had public information, the defendant's trades were based on the extra edge of alleged insider information.
The government rebuttal will continue on Monday.
Image: Rajat Gupta
