Ilya Marritz covers business for WNYC.
For the second time in as many years, Goldman Sachs chief executive Lloyd Blankfein is testifying at an insider-trading trial.
On Monday, Blankfein was called by the government to give evidence as part of its case against former Goldman board member Rajat Gupta.
Gupta is accused of passing secrets he learned from Goldman Sachs’ board to a billionaire hedge fund founder who used the information to make tens of millions of dollars. Gupta has pleaded not guilty. The trial is in its third week.
Blankfein said Monday he considered the contents of a July 14, 2008, strategy meeting which included Gupta, among other board members, to be confidential. At that meeting, Goldman Sachs’ leadership decided that acquiring a commercial bank was not in the firm’s interest.
A government wiretap from July 29, 2008, shows hedge fund billionaire Raj Rajaratnam asked Gupta about “a rumor” Goldman Sachs might buy a bank, and Gupta replied that the board did not favor that option.
Asked by assistant U.S. Attorney Reed Brodsky whether he ever authorized Gupta to share information from the strategy meeting, Blankfein answered with a single word: “no.”
Blankfein also described an event that is a key focus of the trial: Warren Buffett’s September 23, 2008, decision to invest $5 billion in Goldman Sachs to prop up the bank in the midst of a financial meltdown.
The offer from Buffett came around 1:30 or 2 p.m. that day, Blankfein testified, and by late afternoon he had won the approval of Goldman Sachs’ board of directors, who gave their assent via a hastily-arranged telephone conference.
Minutes later, prosecutors contend, Gupta tipped off Rajaratnam about Buffett’s investment. Rajaratnam quickly instructed his traders to buy up millions of dollars worth of Goldman Sachs shares.
Blankfein spoke in a strong, clear voice throughout almost three hours of testimony, much of it tedious recitation of numbers and dates on emails and other documents. Jurors were observed to doodle on their legal pads and sometimes nod off.
As he left the witness stand, Blankfein seemed to briefly glance in Gupta’s direction.
Blankfein will likely be called back to the stand late Wednesday or on Thursday. Defense lawyers have not yet had the chance to question him.
Last year, Blankfein was called to testify at the trial of the hedge fund founder, Raj Rajaratnam. Rajaratnam was convicted and is serving an 11-year prison sentence, the longest ever given in an insider trading case.
Gupta also sat on the board of Procter & Gamble.
With the Associated Press