NEW YORK (Reuters) - Evidence of insider trading against businessman Rajat Gupta is “overwhelming,” a prosecutor told jurors at the trial’s close on Wednesday, while a defense lawyer countered that the government had a weak, circumstantial case without direct proof.
Jurors were expected to begin deliberating the charges against Gupta, a former Goldman Sachs Group Inc board member, later on Wednesday in one of the U.S. government’s biggest insider-trading prosecutions in recent years.
Prosecutors said in closing arguments that Gupta had brazenly and illegally passed stock tips to now-imprisoned hedge fund manager Raj Rajaratnam, but the defense argued that the government “had no real, hard, direct evidence” to prove it.
“Where is the beef in this case?” defense lawyer Gary Naftalis asked the Manhattan federal court jury. “We have had no real first-hand knowledge of the crimes alleged to have been committed here.”
Prosecutors have accused Gupta, 63, of passing tips to Rajaratnam including the $5 billion investment boost for Goldman by Warren Buffett’s Berkshire Hathaway in 2008, at the height of the financial crisis. They have said that Gupta also leaked confidential information when he was on the board of Procter & Gamble.
Rajaratnam, founder of the Galleon Group hedge fund and a one-time billionaire, was convicted in the same courthouse last year and is serving an 11-year prison term.
“Rajat Gupta abused his position as a corporate insider by providing secret company information to his longtime business partner and friend Raj Rajaratnam, so Mr. Rajaratnam could use that information to buy and sell stocks before the investing public,” federal prosecutor Richard Tarlowe told the jury.
“By doing so, Gupta enabled Rajaratnam to make millions of dollars,” he said.
“Time and time again Gupta betrayed that trust and violated that duty by using the secret information to help Rajaratnam cash in on it,” Tarlowe told the jurors. “The evidence against Gupta is overwhelming.”
To win a conviction, prosecutors must prove beyond a reasonable doubt that Gupta betrayed his duties to the companies and that he had something to gain from tipping Rajaratnam. The former board member was not accused of trading in stocks of the companies at the center of the case, but he and Rajaratnam were associates who had several investments together.
Gupta is a retired head of the McKinsey & Co business management consultancy. He joined Goldman’s board in 2006 and left in May 2010, seven months after Rajaratnam’s arrest. He also is a former director at American Airlines Corp.
He faces a maximum prison sentence of 25 years if convicted on the charges of securities fraud and conspiracy.
Before trial summations started on Wednesday morning, Gupta kissed and embraced his eldest daughter, Geetanjali Gupta, who testified on his behalf on Monday and Tuesday. Gupta’s wife, Anita, and his four daughters have been a regular presence in the courtroom throughout trial, now in its fourth week.
At the trial, the jury heard about Gupta’s humble beginnings in India and his rise to the ranks of the global corporate elite. They also heard from prosecution star witness Lloyd Blankfein, the Goldman Sachs chief executive, who said all discussions at board meetings were confidential. Blankfein testified against Rajaratnam last year.
The case is USA v Gupta, U.S. District Court for the Southern District of New York, No. 11-907.
Editing by Martha Graybow and Maureen Bavdek