Gupta was privy to secrets: Goldman chief
05 Jun 2012
Lloyd Blankfein, Goldman Sachs Group Inc's chairman and chief executive, in his testimony at former board member Rajat Gupta's insider-trading trial told the court that Gupta was privy to company secrets that included acquisitions and earnings.
Blankfein said board members were not supposed to speak about the discussions at board meetings, and told the jury yesterday "all parts of it were confidential." Gupta stands accused of passing on information about Goldman to Galleon Group hedge fund manager Raj Rajaratnam, who was sentenced to 11 years in prison after his own trial last year.
The FBI caught Gupta telling Rajaratnam on a wiretap that Goldman was discussing the acquisition of a commercial bank during the height of the financial crisis in 2008. Gupta has pleaded not guilty, and his lawyers argue that the case against him was speculative.
Blankfein said he regularly passed on updates to Gupta about the firm's financial performance - including when the firm suffered its first quarterly loss after it became a public company - and other major developments, like legendary investor Warren Buffett's infusion of $5 billion into the firm during the financial crisis.
Gupta was privy to discussions of the possible acquisition of commercial banks and even troubled insurance giant American International Group Inc in mid-2008, according to Blankfein. AIG later foundered that year and had to be administered a massive infusion of government funds.
Blankfein also told the jury, how Gupta tried to leave Goldman's board in 2008, but was asked to stay in view of the worsening financial crisis. Gupta continued to remain on board two more years.
Although Gupta's alleged crimes are linked to the financial crisis, he is not facing charges of contributing to the turmoil or ensuing Great Recession. Analysts say Gupta's trial probably will not end critics' calls for prosecutions of high-level Wall Street executives for the financial crisis.
Meanwhile, according to John Cruedele of New York Post, Lloyd Blankfein said something yesterday on the witness stand in Manhattan federal court that was a bombshell.
He added though few people in court probably would have even heard the statement, it could, ultimately, land Blankfein's in trouble.
