Rajat Gupta, Rajaratnam had animosity: defence lawyer


New York : The defence team of Goldman Sachs Group’s Indian American director Rajat Gupta, accused of insider trading, is seeking material to show “animosity” between Gupta and convicted hedge fund billionaire Raj Rajaratnam.

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Gupta’s poor relationship with Rajaratnam, the Galleon Group co-founder convicted of profiting from his tips, would be a “key defence theme”, one of Gupta’s lawyers said.

In a letter to US District Judge Jed Rakoff Thursday, lawyer David Frankel said an unnamed “key government witness” discussed the “animosity between the two men” in a July 2010 interview with investigators from the Securities and Exchange Commission and Federal Bureau of Investigation.

In a hearing in January before Rakoff, who will preside over Gupta’s criminal trial in May, prosecutors said Claes Dahlback, a Goldman Sachs director who is a former chief executive officer of Sweden’s Investor AB, spoke to Gupta after Rajaratnam’s October 2009 arrest.

“Dahlback asked Gupta if Gupta knew Rajaratnam,” Rakoff said, quoting a memo summarising Dahlback’s June interview with the government.

“Gupta responded that ‘Rajaratnam was a bad man’. Gupta further stated Gupta lost money with Rajaratnam,” Rakoff said, summarising the witness report.

Prosecutors said in January that Gupta was motivated to pass tips to Rajaratnam by friendship and by investments he held with the hedge-fund manager.

Defence lawyers may try to counter the government’s case by showing friction between the two men.

In November, Rakoff ruled that Lloyd Blankfein, Goldman Sachs’s CEO, could be questioned before Gupta’s criminal trial begins. Rakoff said depositions of other Goldman Sachs officers must be conducted after the trial.

In his deposition in the SEC case, Blankfein said that representatives of the US Attorney’s Office, the SEC and FBI had prepared him, in two sessions, for his testimony.

Reed Brodsky, one of the federal prosecutors in Gupta’s criminal case, asked three-fourths of the questions in the sessions, Frankel said.

Gupta’s lawyers have asked Rakoff to allow them to conduct additional questioning of Blankfein and production of the documents shown to him by prosecutors.

In a separate court filing, the SEC said that Gupta’s lawyers shouldn’t be allowed to conduct additional questioning of Blankfein.