On Day 7, the US government tried to establish that Rajat Gupta, former global chief of McKinsey & Co., regularly visited the office of Galleon Hedge Fund LLP
on Madison Avenue in Manhattan.
Gupta has been charged with passing confidential information about Goldman Sachs Group Inc. and Procter & Gamble Co. to billionaire hedge fund manager Raj Rajaratnam, who co-founded Galleon. Rajaratnam was convicted of insider trading last year and is serving an 11 year prison term.
FULL COVERAGE: Rajat Gupta trial
Gupta, who served on the boards of Goldman Sachs and P&G, has pleaded not guilty to charges of conspiracy and securities fraud. His lawyers have argued that Gupta and Rajaratnam did not know each other well and they eventually had a falling out over certain business decisions made by the Galleon chief.
On the other hand, US government lawyers have been trying to convince the 12-member jury that Gupta and Rajaratnam were quite thick and they constantly interacted. On Wednesday, the government called as a witness Joseph Gangidino from Integrated Electronic Solution, which set up security paraphernalia in the Galleon office including a swipe card mechanism.Highlights of trial: Day 1
| Day 2
| Day 3
| Day 4
| Day 5
| Day 6
The prosecution pulled out records of Gupta's swipe card being used to enter the Galleon office. In one instance, the record showed that this card was swiped to enter Galleon's trading room before a Goldman Sachs meeting on the first quarter earnings scheduled on March 12, 2007. In another instance, the prosecution matched up Gupta's lunch appointment with Rajaratnam in 2008 with the swipe time registered for the defendant's card.
Guptas' counsel, which maintains that the prosecution's case is based entirely on circumstantial evidence, argued that anybody could be using Gupta's card. "You have no knowledge that Mr. Gupta in fact used the card," lawyer David Frankel asked Gangidino, who replied that that he could not confirm this.
The prosecution is putting up different kinds of evidence - phone records, trade records and now swiping records-- to convince the jury that Rajaratnam's trades were not a coincidence but linked with Gupta.
Gupta's legal team highlighted another record that showed the former McKinsey partner's key had been swiped both in the side lobby and the trading room at 9:42 am on March 3, 2008. Frankel perhaps wanted to highlight that there could be inaccuracies in how the records are collected or different people had been using Gupta's card.
Assistant US Attorney Reed Brodsky countered by asking Gangidino how such a swipe was possible. The government witness replied that it could be done if a person had swiped within 60 seconds, for instance, by running quickly between the two spots.
Earlier in the day, Gary Naftalis in Gupta's legal team cross-examined government witness Michael Cardillo, who pleaded guilty to insider trading last year. In this trial, former Galleon trader Cardillo has told the jury that he had traded on P&G shares and The JM Smucker's Co. shares based on confidential information.
The prosecution is trying to prove that it was Gupta who had leaked information to Rajaratnam about a $3 billion deal of JM Smucker's acquiring Folgers Coffee from P&G in June 2008. Gupta has also been accused of telling the hedge fund manager that P&G's shares were going to lose value in the first quarter of 2009.
Gupta's side has denied this. They have maintained that Rajaratnam had many sources who could have passed him these tips.
Naftalis attempted to convince the jury that Galleon traders exaggerated their big brass contacts in the corporate world. He asked Cardillo if he had heard about Rajaratnam claiming to have passed information on Intel to billionaire investor George Soros.
Cardillo responded that he didn't know of Rajratnam's involvement. "I don't remember Raj being a part of it," he said. The American media has reported that a spokesperson has said that Soros received no insider information from Rajaratnam.
Naftalis also tried to paint Cardillo as someone cooperating with the government to get a light sentence-a tactic commonly adopted by defendant attorneys in the US. Cardillo is yet to be sentenced. Preet Bharara in court
Manhattan US Attorney Preet Bharara, who is at the helm of the sweeping investigation against insider trading, made a surprise visit to the courtroom on Wednesday. Close to the end of the day, he was spotted standing at the back of courtroom.
Bharara, who is on Time magazine's list of the 100 most influential people in the world this year, has vowed to clean up Wall Street. The US government has a lot riding on getting convictions in these insider trading cases, which have taken almost four years to investigate and consumed millions of dollars.
During his brief appearance, Bharara spoke with his team as well as exchanged pleasantries with Naftalis. The lawyer didn't comment on how the case was going.