New York: Goldman Sachs Group Inc chief executive Lloyd Blankfein was set to testify on Wednesday as a government witness at the trial of hedge fund manager Raj Rajaratnam, intensifying the focus on what is already the biggest insider trading case in decades.
Blankfein was expected to tell Manhattan federal court jurors about a former board member who has been accused by regulators of leaking confidential information about the bank to Rajaratnam, the founder of Galleon Group.
Goldman has not been accused of wrongdoing. The appearance of Blankfein on the witness stand is expected at least temporarily to take attention away from Rajaratnam and shine a spotlight on the workings of Wall Street’s most powerful bank.
Prosecutors have accused the Sri Lankan-born Rajaratnam, a one-time billionaire, of illegally making $45 million from 2003 to 2009 based on tips from insiders, some of whom were highly placed executives in corporate America.
Rajaratnam, 53, has said his trades were based on his own research and publicly available information. He has vowed to clear his name at trial.
Prosecutors plan to call Blankfein to testify about Rajat Gupta, a former Goldman director accused this month by the US Securities and Exchange Commission of passing confidential information about the Wall Street bank to Rajaratnam.
They had asked US district judge Richard Holwell to block Rajaratnam’s lawyers from cross-examining Blankfein on whether Goldman bears responsibility for the 2008 financial crisis, or is the subject of any Department of Justice or SEC probes.
They said such information is irrelevant to the trial, and could create unfair prejudice against Blankfein’s testimony.
In court on Wednesday morning, Rajaratnam lawyer John Dowd said “I’m not going to inquire” about pending investigations. He also said he may recall Blankfein to the stand later.
The government also has said it intends to play FBI phone taps of Gupta tipping Rajaratnam about an expected $5 billion preferred stock infusion from Warren Buffett’s Berkshire Hathaway Inc in September 2008, at the height of the financial crisis.
Prosecutors said Blankfein is expected to testify after about one hour of additional testimony by Rajiv Goel, a former Intel Corp managing director who began testifying on Tuesday. Goel would resume his testimony at a later time.