USA TODAY US Edition

Goldman CEO Blankfein testifies

-

NEW YORK — The CEO of Goldman Sachs told a jury at an insider-trading trial Wednesday that a former board member violated the company’s confidenti­ality policies when he discussed board secrets with a thenbillio­naire hedge fund boss.

CEO Lloyd Blankfein listened as federal prosecutor­s played snippets of a 2008 telephone conversati­on recorded by the FBI between Galleon founder Raj Rajaratnam and former Goldman board member Rajat Gupta. When asked if Gupta had broken board rules, Blankfein responded, “Uh… yes.”

Blankfein testified that board members are expected to observe a strict code of confidenti­ality on possible deals that could move markets. “We don’t want the informatio­n about our company getting outside before it’s appropriat­e,” he said.

The Wall Street titan was subpoenaed to testify at the trial of Rajaratnam, who is accused of making more than $50 million through illegal trades by extracting secrets from financial profession­als and employees at public companies. Rajaratnam has said through his lawyer that he only traded based on informatio­n that was already known.

Prosecutor­s allege Gupta called Rajaratnam, founder of the Galleon funds, twice to give him tips. They said Rajaratnam then traded thousands of shares of Goldman stock. Gupta has not been charged criminally. The Securities and Exchange Commission has filed civil charges against Gupta.

On cross-examinatio­n, Blankfein testified that before the government brought the case, Gupta had a solid reputation as a trusted board member.

Newspapers in English

Newspapers from United States