Top Berkshire executive Jain potential witness in Gupta trial
A superseding indictment against ex-Goldman Sachs director Rajat Gupta, an accused in insider trading scam, is expected to be filed by January 31, according to US prosecutors, who said his "close friend" and top Berkshire Hathaway executive Ajit Jain could be a potential witness in the trial slated for April.
New York: A superseding indictment against ex-Goldman Sachs director Rajat Gupta, an accused in insider trading scam, is expected to be filed by January 31, according to US prosecutors, who said his "close friend" and top Berkshire Hathaway executive Ajit Jain could be a potential witness in the trial slated for April.
At a hearing held in a Manhattan court yesterday, Assistant US Attorney Reed Brodsky said the deadline for the government to file the superseding indictment, which may contain expanded charges, is January 31.
US Judge Jed Rakoff said an arraignment, if the superseding indictment is filed, may take place on February 6 or 7.
The government had earlier this month said "more likely than not there will be a superseding indictment."
Gupta, 63, who has pleaded not guilty to the insider trading charges filed against him last October, was not present for the hearing which lasted nearly two hours.
Prosecutors claim Gupta passed on insider information to Sri Lankan hedge fund manager Raj Rajaratnam about a USD five billion investment proposed by Berkshire in Goldman Sachs.
Brodsky told judge Rakoff that Jain could be called in as a potential witness for Gupta during the trial, slated to begin April 9.
Jain is head of Berkshire Hathaway's reinsurance business and has been touted as a possible successor to company CEO Warren Buffet. Jain had been interviewed by Gupta's defence team before he met the prosecutors.
"Ajit Jain, a close friend of Gupta's, spoke to us after he spoke to the defence. My understanding is that he spoke to the defence again after he spoke to us," Brodsky said.
Goldman Sachs Director Claes Dahlback could also be a potential defence witness, Brodsky said.
During the hearing, Rakoff settled issues relating to exchange of evidence and witnesses between the defence and prosecutors.
Gupta's lawyer Gary Naftalis said his defence would focus on the fact that relationship between his client and Rajaratnam had deteriorated in 2008 and 2009, and so Gupta could not have shared confidential company information with Rajaratnam.
Gupta was unhappy over the loss of his USD 10 million investment with Rajaratnam after the Lehman Brothers collapsed in September 2008.
"After the Lehman Brothers collapsed, value of our investment of 10 million dollars was lost. We were unhappy with Rajaratnam on how he handled our investment, how we were dealt with and whether we were treated fairly," Naftalis said.
"The behaviour was inconsistent with going out and tipping him."
Brodsky, however, said he completely "disagrees" with the defence position that relations between Gupta and Rajaratnam had deteriorated. "We think there was even more of a motive to tip Rajaratnam as a result of Gupta's incurring losses."
Naftalis told the judge he wants details about evidence the prosecution may have, including statements Jain may have made to the government.
Rakoff also read from a government document where Dahlback had told prosecutors that he asked Gupta if he knew Rajaratnam after the hedge fund manager was arrested in October 2009. Gupta replied that "Rajaratnam was a bad man" and that he lost money in dealings with him, the judge said.
Gupta has been charged with five counts of securities fraud and one count of conspiracy. If convicted, he faces 20 years in prison on each of the securities fraud charges and five years for the conspiracy charge.
Rajaratnam is currently serving an 11-year jail term in one of the largest insider trading scams in US.