Bloomberg News

Goldman Sachs Chief Blankfein May Be Deposed in Gupta Case

December 01, 2011

(Updates with Goldman Sachs response in ninth paragraph.)

Nov. 30 (Bloomberg) -- Goldman Sachs Group Inc. Chief Executive Officer Lloyd Blankfein and six others may be questioned under oath by lawyers for the Securities and Exchange Commission and Rajat Gupta, who was charged with insider trading as part of the Galleon Group LLC investigation.

Lawyers for Gupta, a former Goldman Sachs director, sought to depose Blankfein and other firm executives including Chief Financial Officer David Viniar, President Gary Cohn, Managing Director David Loeb and John Bryan, as part of a related suit brought by the SEC. While U.S. District Judge Jed Rakoff in New York authorized the questioning of Blankfein before the April 9 criminal trial, he said depositions of the other officers must be conducted afterwards.

Gupta, who also sat on the board of Procter & Gamble Co. and led McKinsey & Co., was indicted by a federal grand jury last month on five counts of securities fraud and one count of conspiracy to commit securities fraud for passing inside information to Galleon co-founder Raj Rajaratnam. Rakoff is presiding over Gupta’s criminal case as well as the SEC lawsuit.

In addition to Blankfein, Rakoff granted SEC requests to question Gary Rosenbach, Galleon’s co-founder, and Ian Horowitz, a former trader who worked for Rajaratnam and was recorded on a U.S. wiretap. The judge said lawyers may also depose three other individuals associated with Galleon -- Ananth Muniyappa, Brock Vandervliet and Leon Shaulov. Also to be deposed is Greg Ormond of Exemplar Wealth.

‘No Material Argument’

“The court sees no material argument whatsoever for delaying the depositions,” Rakoff said in his ruling.

Gupta, 62, of Westport, Connecticut, was a close friend and business associate of Rajaratnam, prosecutors said. He made multimillion-dollar investments with the hedge fund manager and also passed him inside information after attending Goldman Sachs board meetings from 2008 through January 2009, according to the indictment.

Rakoff today said the SEC couldn’t depose Ragakanthan Rajaratnam, the younger brother of Raj Rajaratnam’s who once worked as a Galleon portfolio manager.

The judge today also delayed a request to question Caryn Eisenberg, the former assistant to Rajaratnam; ex-Galleon trader Michael Cardillo; and James McNerney, presiding director of Procter & Gamble.

Eleven Years

David Wells, a spokesman for New York-based Goldman Sachs, declined to comment on Rakoff’s ruling. John Nester, a spokesman for the SEC, declined to immediately comment on the judge’s decision.

Raj Rajaratnam was sentenced to 11 years in prison, the longest ever for insider trading, after he was convicted earlier this year. He is set to surrender to prison officials Dec. 5.

Rajaratnam, who has also been sued in the SEC case, had sought to depose Cohen and Loeb, as well as Goldman Sachs board member Jon Winkelried, Managing Director Jennifer Padovani and five former Galleon employees. Rakoff also delayed those depositions until after Gupta’s criminal trial.

On Oct. 26, the same day Gupta was indicted, the SEC sued him in Manhattan federal court, accusing the former Goldman Sachs director of engaging in an “extensive insider-trading scheme” with Rajaratnam.

The cases are U.S. v. Gupta, 11-cr-00907, and SEC v. Gupta, 11-cv-07566, U.S. District Court, Southern District of New York (Manhattan).

--Editors: David E. Rovella, Michael Hytha

To contact the reporters on this story: Patricia Hurtado in New York at pathurtado@bloomberg.net; Bob Van Voris in New York at rvanvoris@bloomberg.net

To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net


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