At the trial of a one-time billionaire hedge fund founder Raj Rajaratnam that starts tomorrow, the government plans to show that a former Goldman Sachs board member conspired with Mr. Rajaratnam, feeding him inside tips within minutes of learning about them during the 2008 economic crisis. Assistant U.S. Attorney Jonathan Streeter told Southern District Judge Richard J. Holwell on Friday that then-Goldman board member Rajat Gupta called Mr. Rajaratnam twice to give him tips, including word that Goldman would lose money for the first time. Mr. Rajaratnam then traded hundreds of thousands of shares of Goldman Sachs stock.
Mr. Gupta has not been charged criminally in what prosecutors have called the largest hedge fund insider trading case in history. The Securities and Exchange Commission filed civil charges against him last week, accusing him of tipping Mr. Rajaratnam seven minutes before the stock markets closed on Sept. 23, 2008, that the Goldman Sachs board had approved an offer from Warren Buffett’s Berkshire Hathaway to invest $5 billion in the banking giant.
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