June 7, 2012 / 8:24 PM / 7 years ago

Blankfein says did not OK Gupta to share board info

NEW YORK, June 7 (Reuters) - The chief executive of Goldman Sachs Group Inc told a federal court jury on Thursday that he did not authorize former board member Rajat Gupta to share information about the bank that was discussed at board meetings.

Goldman CEO Lloyd Blankfein returned to the witness stand for a second day, smiling broadly as he strode into the courtroom, to testify for the prosecution at Gupta’s insider-trading trial.

Gupta, who sat on the Goldman board of directors until 2010, is fighting charges in U.S. District Court in Manhattan that he leaked inside information about the bank to now-imprisoned hedge-fund manager Raj Rajaratnam. Gupta faces a possible 25-year prison sentence if he is convicted on the charges of securities fraud and conspiracy.

Prosecutors contend that Gupta called into a March 12, 2007 meeting of Goldman’s audit committee from the offices of Rajaratnam’s Galleon Group. Minutes after the call ended, the government says, Gupta told Rajaratnam about Goldman’s first-quarter 2007 earnings. The results were not publicly announced until the following day.

“Did you authorize Mr. Gupta on March 12, 2007, to disclose any information learned during that audit committee meeting to any outsider prior to it being public?” asked prosecutor Reed Brodsky.

“No,” Blankfein answered in a firm voice. Neither Goldman nor Blankfein is accused of any wrongdoing in the case.

Blankfein also said he had not authorized Gupta to share information about a Sept. 20, 2007 board meeting and said the discussions were confidential “sensibly because the information was very important and potentially market moving as it relates to our stock.”

As Blankfein arrived at the courtroom, Gupta stared straight ahead with his hands clasped. Gupta glanced once at Blankfein as the Goldman chief walked toward the witness stand.

After barely five minutes of Blankfein’s testimony, prosecutors and defense attorneys met with U.S. District Judge Jed Rakoff in a sidebar out of the jury’s earshot for 17 minutes.

As the lawyers talked among themselves, Blankfein leaned back in his chair, smiled to the jury and toyed with the microphone.

Prosecutors say Gupta, 63, illegally leaked confidential information to Rajaratnam between March 2007 and January 2009 while serving on the boards of Goldman and Procter & Gamble .

Rajaratnam was convicted of conspiracy and securities fraud last year and is serving an 11-year prison term. Blankfein also testified for the prosecution at that trial.

Blankfein began his testimony on Monday, but did not return to court until Thursday because of scheduling issues. On Monday, he was asked about a June 2008 board meeting that he and Gupta both attended, telling the jury that “all parts of it were confidential.”

Gupta is a retired global head of the McKinsey & Co consulting firm. His lawyers say he had nothing to gain financially by passing inside tips to Rajaratnam, and they argue that the government has a weak circumstantial case.

The case is USA v Gupta, U.S. District Court for the Southern District of New York, No. 11-907.

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