Witness says Rajat Gupta was on Rajaratnam's 'important people' list

Former Indian-American Goldman Sachs director Rajat Gupta was once on convicted hedge fund billionaire Raj Rajaratnam's "important people" list, according to a prosecution witness.

On the second day of the insider-trading trial of Gupta in Manhattan federal court, Rajaratnam's executive assistant Caryn Eisenberg said her former boss was very particular about not being disturbed at the beginning and end of the trading day. But he made an exception for those listed as "important people" in Eisenberg's notebook. Among them were Gupta and three other Indian Americans.

Rajiv Goel, then an Intel Corporation managing director, Anil Kumar, a partner then at McKinsey and Parag Saxena, CEO of New Silk Route LLC, an investment firm co-founded by Gupta, were the other three.

Kumar and Goel - who was nicknamed "Peter Pan" on the "important people" list - both later pleaded guilty to insider trading and testified against Rajaratnam at his trial last year.

Someone on that list, Eisenberg said, called urgently just before the market closed on September 23, 2008, the day Goldman board got word of Warren Buffett's $5 billion investment.

Although she said she couldn't identify the voice, Eisenberg recognised it as one of the important ones and told Rajaratnam. According to phone records, Gupta called him at 3.54 p.m. that day. After the call, Eisenberg heard Galleon trader Gary Rosenbach say "buy Goldman Sachs."


Then, she said, Rajaratnam "was smiling more." Eisenberg, though, didn't hear about the Buffett business until the next day: "I went shopping at Bloomingdale's," she said.

Former Galleon trader Ananth Muniyappa testifying about the minutes before the market closed the same day said that "Raj was either still on the phone or just getting off the phone" when he instructed him to buy 100,000 Goldman Sachs shares.

Gupta's lawyers acknowledge that Gupta and Rajaratnam were friends. But the relationship soured after Rajaratnam lost $10 million that Gupta invested in an entity called Voyager Capital Partners.

In questioning Eisenberg, defence lawyer David Frankel brought out that Gupta was not the only person associated with Goldman Sachs on the "important people" list. Part of the defence strategy is to show that Rajaratnam had other potential sources of inside information about Goldman other than Rajat Gupta.