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Goldman CEO Testifies at Ex-Board Member's Trial

Thursday, June 07, 2012

Rajat Kumar Gupta, former Goldman Sachs board member, leaves a Manhattan court after surrendering to federal authorities October 26, 2011. (Spencer Platt/Getty Images)

A prize government witness, Goldman Sachs chief executive Lloyd Blankfein, has resumed testifying at the New York insider trading trial of a former Goldman board member.

Blankfein told the Manhattan jury earlier this week that he initially planned to force Rajat Gupta off the banking giant's board in 2008 because of a conflict of interest. Instead, he was asked to stay on due to the economic crisis.

He was called as a witness to support government claims that Gupta broke confidentiality promises and spilled company secrets to a billionaire hedge fund boss. Gupta's lawyers have promised an extensive cross examination of Blankfein that will likely stretch into Friday.

Blankfein is the government's last witness. The trial is expected to wrap up next week.

An investment involving Goldman Sachs is key to the prosecution's insider trading trial, as WNYC reported:

Prosecutors allege that on several occasions Gupta, who served on the board of directors at Goldman Sachs and Procter & Gamble, passed on confidential information to Raj Rajaratnam, the founder of the Galleon hedge fund.

One such tip from September 2008 was that Warren Buffett planned to purchase Goldman Sachs shares worth $5 billion, a move that was not publicly known. Rajaratnam then used the information to execute stock trades that would make money for Galleon.

Gupta has pleaded not guilty to the charges. His lawyer argued that Gupta did not cheat anyone when he talked to a friend who ran a hedge fund.

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