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.