NEW YORK — The chief executive of Goldman Sachs told a jury at an insider-trading trial Wednesday that a former board member violated the company’s confidentiality policies when he discussed board secrets with a then-billionaire hedge-fund boss.
CEO Lloyd Blankfein listened as federal prosecutors played snippets of a 2008 telephone conversation recorded by the FBI between Galleon founder Raj Rajaratnam and Rajat Gupta, an ex-board member at Goldman.
When asked if Gupta had broken board rules in the chat, Blankfein responded, “Uh . . . yes.” Blankfein testified that board members are expected to observe a strict code of confidentiality on possible deals that could move markets once they’re announced.
“We don’t want the information about our company getting outside before it’s appropriate,” he said.
The Wall Street titan was subpoenaed to testify at the Manhattan trial of Rajaratnam, who is accused of making more than $50 million through illegal trades by extracting secrets from other financial professionals and employees at public companies.
Rajaratnam has said through his lawyer that he traded based only on information that already was known.
Prosecutors allege Gupta called Rajaratnam twice to give him tips. They said Rajaratnam then traded hundreds of thousands of shares of Goldman Sachs stock.
Gupta has not been charged criminally in what prosecutors say is the largest hedge-fund insider-trading case in history.
