Goldman’s Lloyd Blankfein Will Testify Today in Galleon Trial

Wednesday, 23 Mar 2011 10:06 AM

Lloyd Blankfein, chairman of Goldman Sachs Group Inc., will testify as a government witness today at Galleon Group LLC co-founder Raj Rajaratnam’s insider-trading trial, the judge in the case said.

U.S. District Judge Richard Holwell said in court today that Blankfein will be summoned to the witness stand in Manhattan federal court at about 10:30 this morning.

Prosecutors said in a letter to the judge this week that they want Blankfein to help build their case that Rajaratnam traded on inside information about Goldman Sachs he obtained from Rajat Gupta, then a Goldman board member.

Rajaratnam, 53, is on trial in the largest crackdown on hedge-fund insider trading in U.S. history. The Sri Lankan-born money manager is accused of making $45 million from tips leaked by corporate insiders and hedge fund traders. He denies wrongdoing, saying he based his trades on research.

Blankfein’s testimony comes during the third week of Rajaratnam’s trial. The government may interrupt the testimony it is presenting from Rajiv Goel, a former Intel Corp. executive who is testifying for prosecutors, to offer Blankfein’s testimony.

Rajaratnam got a tip from Gupta about a $5 billion investment in the firm by Warren Buffett’s Berkshire Hathaway Inc., and Gupta allegedly passed the news immediately to Rajaratnam, who bought shares, prosecutors told the jury in opening statements.

The government also alleged that Gupta passed tips to Rajaratnam about Goldman Sach’s quarterly earnings and financial results for Procter & Gamble Co., where Gupta was also a director.

Defense attorney John Dowd said in a court filing this week that he may ask Blankfein on cross-examination about unrelated legal issues confronting the New York-based investment bank.

The case is U.S. v. Rajaratnam, 1:09-cr-01184, U.S. District Court, Southern District of New York (Manhattan).

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