Feds: Ex-P&G and Goldman board member acted alone
NEW YORK — The government has found no evidence that a wealthy hedge fund founder got inside information about Procter & Gamble and Goldman Sachs from anyone other than a former member of both boards, a prosecutor said Thursday.
Assistant U.S. Attorney Reed Brodsky made the comment during a pre-trial hearing for Rajat Gupta. The Westport, Conn., man sat on both boards in 2008, when prosecutors said he gave Raj Rajaratnam inside information about Goldman Sachs' financial condition and the 2008 sale of P&G's Folgers Coffee unit to J.M. Smucker Co. for $3 billion.
Gupta is not charged directly with providing inside information about the Folgers Coffee sale, though it is mentioned in an indictment charging him with conspiracy and securities fraud. Brodsky commented about evidence that Gupta provided inside information after a lawyer for Gupta complained that more specific information was needed from prosecutors.
Gupta, free on $10 million bail, has pleaded not guilty to the charges and faces a trial April 9.
Assistant U.S. Attorney Richard Tarlowe told Judge Jed Rakoff that it was likely that prosecutors will file an updated indictment in the case in the next month.
One-time billionaire Rajaratnam is serving an 11-year prison term after being convicted at trial last year on insider trading charges. It is expected that taped conversations of Rajaratnam will be played at Gupta's trial.
The judge told Gupta's lawyers that it was unlikely he would grant their request to have the audio tapes banned from the trial, especially since two other judges had already ruled they were admissible in federal court and the issue now rests before the federal appeals court in Manhattan.
"If I were the defense, I would not be too optimistic about this particular issue," he said.
Gupta's lawyer, Gary Naftalis, declined comment after the hearing.
In court papers, Naftalis said his client's case was different from the cases of more than two dozen people convicted in the Rajaratnam case because there are no wiretap recordings of conversations in which Gupta passes stock secrets to Rajaratnam and the government does not allege that Gupta ever made trades himself or shared in profits.