Galleon Group Stories June 15, 2012

Report: Wiretapped Goldman exec found guilty of insider trading in case that involves Apple

A federal jury just convicted Rajat Kumar Gupta, an ex-Goldman Sachs director, of insider trading in a case that involves swapped information about Apple and other technology firms.

According to the Wall Street Journal, Gupta was convicted on three counts of securities fraud, one count of conspiracy, and acquitted of two counts of securities fraud. The executive dabbled in a bit of insider trading when he discussed non-public boardroom information about his company and Procter & Gamble to a prominent hedge fund manager.

Raj Rajaratnam, the founder of Galleon Group, which is a New York-based hedge fund management firm, earned millions off Gupta’s tips. He is now serving an 11-year prison sentence on charges stemming from the insider trading case. Lawyers for Gupta recently submitted evidence that pinpointed another Goldman Sachs executive as sharing inside information with Rajaratnam.

As 9to5Mac previously detailed, David Loeb, who is head of Asia equity sales for Goldman Sachs Group Inc., in New York, was supposedly caught on a U.S. wiretap providing confidential information about Apple Inc., Intel Corp., and Hewlett-Packard Co., to Rajaratnam.

According to SFGate, the Manhattan jury contemplated the charges against Gupta, but did not listen the wiretap evidence during his trial. U.S. District Judge Jed Rakoff ruled that the wiretaps were inadmissible hearsay. An attorney for Gupta told the judge earlier this week that the evidence about Loeb was critical to the defense and proved “that another person committed an act of which the defendant stands accused.”

The defense rested its case and the jury concluded this morning. Gupta faces up to five years in prison for the conspiracy charge and up to 20 years for each fraud charge. His sentencing is set for Oct. 18.

Galleon Group Stories May 23, 2012

Goldman exec caught on tape dishing insider information about Apple

A Goldman Sachs executive apparently dabbled in a bit of insider trading when he allegedly discussed non-public information about Apple Inc., to a prominent hedge fund manager during a federal wiretap investigation.

David Loeb, who is head of Asia equity sales for Goldman Sachs Group Inc., in New York, was supposedly caught on a U.S. wiretap providing inside information on Apple Inc., Intel Corp., and Hewlett-Packard Co., to Raj Rajaratnam, the founder of Galleon Group, a New York-based hedge fund management firm. Rajaratnam is now serving an 11-year prison sentence for insider trading.

Today’s wiretap tidbit emerged after Gary Naftalis, a lawyer for Rajat Kumar Gupta, told a judge about the tapes’ existence. Gupta is an ex-Goldman Sachs director arrested in late 2011 by the FBI on insider trading charges derived from the Raj Rajaratnam Galleon Group case, and he is currently embroiled in an ongoing criminal trial. Gupta adamantly denies any misconduct.

According to Bloomberg (via Crain’s New York):

  • ‘He’s on a tape giving out information’ about those companies, Mr. Naftalis told U.S. District Judge Jed Rakoff outside the presence of the jury.
  • Mr. Naftalis told the judge that prosecutors were withholding exculpatory evidence he said could help his client.
  • […] Assistant U.S. Attorney Reed Brodsky told Judge Rakoff that Mr. Loeb “provided Intel, Apple and Hewlett Packard information to Mr. Rajaratnam.” It’s the first time the government has publicly named Mr. Loeb and confirmed that the U.S. has evidence that he gave information about Apple, Intel and Hewlett-Packard to Mr. Rajaratnam.
  • “There’s none that Mr. Loeb had access to material, nonpublic information about Goldman’s earnings,” Mr. Brodsky said.

Loeb has not been formally accused of any crime.

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