Goldman CEO Testifies Against Gupta, Calls Info. 'Confidential'

Jun 5 2012 | 1:28pm ET

Goldman Sachs CEO Lloyd Blankfein testified yesterday at Rajat Gupta's insider-trading trial that Gupta was not authorized to discuss details of Goldman board of directors meetings.

Blankfein, who took the stand 15 months after doing so at the trial of Galleon Group founder Raj Rajaratnam, told the jury about Goldman's policies. Gupta, a former member of Goldman's board, is accused of passing along to Rajaratnam confidential information discussed at Goldman board meetings.

"You're not supposed to reveal the confidences of what was discussed in a board meeting," Blankfein said. "Anything that was discussed at the board meeting is a confidential fact."

Blankfein read from Goldman's corporate governance guidelines—"the proceedings and deliberations of the board and its committees shall be confidential"—and testified about several board meetings that Gupta is alleged to have tipped Rajaratnam about. Among those tips were allegedly advance notice of Goldman's discussions about buying a commercial bank or American International Group, and Berkshire Hathaway's 2008 investment in the bank.

Blankfein also discussed at length Goldman's earnings and projections, which Gupta is also alleged to have told Rajaratnam about.

Blankfein's testimony, which is scheduled to resume tomorrow after a one-day break in the trial to allow U.S. District Judge Jed Rakoff to give a speech in Washington, D.C., interrupted the continuing testimony of former McKinsey & Co. partner Anil Kumar, a former friend and business associate of both Gupta and Rajaratnam.

Kumar told the jury about Gupta's investment in a Galleon hedge fund, Voyager. That fund's collapse in 2008 strained the relationship between Gupta and Rajaratnam, and Kumar testified that Gupta threatened to sue Rajaratnam in 2009—after the government alleges he stopped tipping the Galleon chief, who was arrested later that year.

"He said he'd discovered something that was quite distressing," Kumar said, discussing a visit to his apartment by Rajaratnam in early 2009. "Rajaratnam had removed some of the money for the fund for himself."

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