US authorities on Wednesday said there was "devastating evidence" against Rajat Gupta that he "abused his position" and "broke the law" when he tipped Raj Rajaratnam, even as the defence argued that the former Goldman Sachs director did not pocket one dishonest dime in his association with the convicted hedge fund founder.
The defence and the prosecution started presenting their closing arguments in 63-year-old Gupta's insider trading trial in the Manhattan federal court on Wednesday.
The prosecution summarises for the jury through e-mails, phone records and trading records that Gupta had passed secret information to Rajaratnam about Goldman Sachs and Procter & Gamble.
Gupta's lawyer Gary Naftalis argued that Gupta had no motive to share insider information with Rajaratnam as he was frustrated and upset with him about his $10 million loss in an investment fund parked with the founder of Galleon group.
"It is undisputable that Gupta never did any insider trading. No dishonest dime ended up in Gupta's pocket," Naftalis said.
Naftalis said Gupta was planning to resign from Goldman Sachs as board member around September 12, 2008 and so he could not had any motive to tip Rajaratnam about a $5 billion investment Warren Buffett was planning to make in Goldman Sachs.
He further said Gupta had a conversation with his eldest daughter around September 20, 2008 that he was stressed, frustrated and upset with Rajaratnam about his $10 million loss.
"In this context the claim by the prosecution that Gupta tipped Rajaratnam on September 23, 2008 defies all sense of realities and commonsense," the defence lawyer said.
If convicted Gupta, who served on boards of various companies, faces up to 25 years in prison.
The former McKinsey head is accused of breaching his fiduciary duties by passing secret corporate information to Rajaratnam, who is currently serving an 11-year prison sentence.
On Tuesday, Berkshire Hathaway's India-born top executive Ajit Jain told the court that he was "shocked" to hear his friend Gupta had lost USD 10 million in an investment fund with Rajaratnam.
Jain, seen as a possible successor to Berkshire's billionaire CEO Buffett, testified as a defence witness in the insider trading trial.
In a video deposition, which was recorded on May 27 and played in the courtroom for the jury on Tuesday, Jain tells Gupta's lawyer Naftalis and the prosecution he was "shocked to hear" from Gupta in 2009 that he had lost $10 million in a Voyager fund that was managed by Rajaratnam.
In response to a question by Naftalis, Jain said it was "unusual" for Gupta to share information about his investment with him.
Gupta's lawyers have argued in the case that he had no motive to share secret boardroom information about Goldman Sachs and Proctor and Gamble with Rajaratnam since there was a falling out between the two when Gupta lost his money.
A former McKinsey partner Anil Kumar had testified in the trial that Gupta felt Rajaratnam had taken his money behind his back and was being "evasive" about what had happened to his investment.
Gupta, a relatively "calm" person, was upset with Rajaratnam, Kumar had said. The prosecution has said Gupta leaked information to the Sri Lankan co-founder of the Galleon Group much before he lost his money in Voyager.
The government alleges Gupta tipped Rajaratnam seconds after a Goldman board meeting ended about a $5 billion investment by Buffett in the banking giant at the height of the financial crisis in 2008.
The former Proctor and Gamble and Goldman board director has pleaded not guilty to one count of conspiracy and five counts of securities fraud.