With less than two weeks left for his trial on insider trading charges, former Goldman Sachs Director Mr Rajat Gupta’s lawyers are pushing to get secretly recorded phone conversations between him and convicted hedge fund founder Mr Raj Rajaratnam excluded as evidence, calling them “extremely prejudicial“.
Mr Gupta’s lawyer Mr Gary Naftalis submitted documents in the US District Court, Southern District of New York on Monday arguing that a July 2008 conversation between the two does not contain “direct evidence” that Mr Gupta provided confidential information to Mr Rajaratnam.
Mr Naftalis said in the court filings that the July 29 call is the “only recorded substantive phone conversation” between Mr Gupta and Mr Rajaratnam but the “problem for the government is that this call neither included a tip of material, non-public information nor led to any trading by Mr Rajaratnam.”
During the 24-minute call, a transcript of which has been submitted in court, Mr Rajaratnam asks Mr Gupta whether he had “heard anything along that line” about a “rumour” that Goldman Sachs is looking to buy a commercial bank.
Mr Gupta replied, “Yeah. This was a big discussion at the board meeting.”
Prosecutors are seeking to use this wiretap conversation, as well as 26 other recorded phone conversations, as evidence at the trial which will start on May 21 that Mr Gupta engaged in insider trading.
Mr Gupta’s defence has sought to exclude these phone conversations, saying they are “extremely prejudicial” and irrelevant to charges of conspiracy and securities fraud faced by Mr Gupta.
Mr Naftalis said the government’s exhibit list for trial includes “at least 26 recorded phone conversations that on their face relate to stocks and conspiracies other than the one charged in the indictment, and that mostly are between Mr Rajaratnam and persons who are not alleged to be co-conspirators of Mr Gupta.”
“It appears that the government seeks to reprise the Mr Rajaratnam trial in order to shore up its weak circumstantial case against Mr Gupta, resorting to evidence about other companies and other alleged conspiracies,” Mr Naftalis said.
The other wiretaps include calls between Mr Rajaratnam and former hedge-fund manager Ms Danielle Chiesi and with former McKinsey consultant Mr Anil Kumar, who was a key government witness at Mr Rajaratnam’s trial.
Ms Chiesi and Mr Kumar have pleaded guilty to the criminal charges in the case.
Mr Gupta has pleaded not guilty to charges of insider trading.