NEW YORK, Jan 5 (Reuters) - A New York federal judge on
Thursday damped hopes that he would throw out government wire
tap evidence in the insider trading trial of Rajat Gupta, a
former board member of Goldman Sachs and Procter & Gamble.
Gupta, a one-time global head of the McKinsey & Co
consultancy firm, is the most prominent corporate executive
charged in the U.S. government's investigation of Wall Street
insider trading, a probe that used secretly recorded phone
conversations as evidence. Dozens of hedge fund managers,
lawyers and executives have been convicted since 2009 in the
Gupta, 63, was indicted in October and is scheduled to go on
trial in Manhattan federal court in April on charges that in
2008 and 2009 he passed on secrets from Goldman and P&G board
meetings to hedge fund founder Raj Rajaratnam, a friend and
business associate who traded on the information.
Rajaratnam is serving an 11-year prison sentence following
his conviction by a jury in May on evidence largely based on
Government investigators recorded at least two discussions
between Rajaratnam and Gupta. The former board member's lawyers
asked U.S. District Judge Jed Rakoff to suppress the recordings
from being heard by a jury, even though the judge in the
Rajaratnam trial had allowed them to be used.
"This is a different defendant and he may be entitled to be
heard on this issue but looking at it realistically, if I were
the defense I would not be too optimistic about this particular
motion," Rakoff said at a pre-trial hearing on Thursday.
Gupta's main lawyer, Gary Naftalis, declined comment after
the hearing, where Gupta sat expressionless with his team of
lawyers. Gupta has pleaded not guilty to the charges, and
Naftalis has previously said that the accusations are based on
In court on Thursday, Naftalis described the indictment as
"vague and mumbo-jumbo" and an "unusual insider trading case."
He said Gupta "didn't trade, didn't profit and there were no
Naftalis had filed motions on Tuesday seeking to suppress
the wiretaps and dismiss some charges in the indictment. He also
asked the government for more specificity of the charges.
A U.S. prosecutor, Richard Tarlowe, told the judge that the
government may file a revised indictment by the end of January
that would spell out how Gupta benefited from his association
The government contends that Gupta provided Rajaratnam with
advance knowledge of Warren Buffett's $5 billion investment in
Goldman at the height of the 2008 financial crisis, as well as
information about Goldman's surprise fourth-quarter loss in 2008
and P&G's quarterly earnings in late January 2009.
Gupta was also accused of telling Rajaratnam in June 2008
about the sale of P&G's Folgers coffee unit to J.M. Smucker
The case is USA v. Rajat K. Gupta, U.S. District Court for
the Southern District of New York, No. 11-907.
For the prosecution: Preet Bharara, U.S. Attorney.
For Gupta: Gary Naftalis of Kramer Levin Naftalis &
(Reporting by Grant McCool)
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