The fallout from the insider trading of Raj Rajaratnam continues as the trial of Rajat Gupta is set to begin today in Federal District Court in Manhattan. The trial will be able Gupta’s release of boardroom information to Rajaratnam, who then used that information for his clients to the tune of $63 million in gains. Rajaratnam is currently serving an eleven year prison term. Gupta sat on the boards of Goldman Sachs and Procter and Gamble.
Prosecutors contend that on five occasions, Mr. Gupta gave Mr. Rajaratnam advance word of market-moving news about the two companies. In each case, Mr. Rajaratnam illegally traded on the tips, the government says.
Goldman, in particular, promises to play a central role, with testimony possibly shedding light on the bank’s inner workings. As part of their defense strategy, Mr. Gupta’s lawyers are expected to vilify Goldman, depicting it as a cesspool of tipsters indiscriminately feeding inside information to Mr. Rajaratnam. Three other Goldman executives are under criminal investigation related to insider trading at Galleon, a fact the defense is likely to use to try to plant reasonable doubt about Mr. Gupta’s guilt in the jurors’ minds.
It’ll be a fun little Wall Street soap opera.
