Photo: Photoshop by Business Insider
Evidence that came to light during the Rajat Gupta trial may spell trouble for other Goldman Sachs employees that did business with convicted insider trader, Raj Rajaratnam.New wiretaps and e-mails indicate that Goldman sent the convicted former hedge funder frequent e-mails full of juicy information before Galleon’s morning meetings, Reed Albergotti at The Wall Street Journal reports.
The question, now, is whether or not that information was truly “insider” information.
Since Rajaratnam’s conviction last year, more and more people who had contact with him have come under suspicion (and worse) of insider trading. A former Goldman partner, Rajat Gupta, was convicted of insider trading last week.
Three other current employees are also under investigation, including Hong Kong-based analyst Henry King, investment banker Matthew Korenberg, and David Loeb, a senior salesman at the bank.
The e-mails in question were sent by Loeb, and came to light as evidence during Rajat Gupta’s trial. That bundle of evidence also includes some wiretapped phone calls.
What’s most of interest to prosecutors, aside from the fact that Loeb called Rajaratnam, “Dr. RR” and signed his e-mails “CBF” for “chunky but funky”, is the fact that Loeb shared Apple and Intel production and product data. There is, however, no evidence that Rajaratnam traded on that information, says the WSJ.
In an August 5, 2008, email to Mr. King, then Goldman’s research chief in Taiwan in 2008, Mr. Loeb asked his colleague for an “update” on Intel. Mr. King wrote back with a spreadsheet attached, with “u would not believe this” in the subject line. defence attorneys for Mr. Gupta maintained at his trial that the Intel information was confidential.
Mr. Loeb emailed Mr. Rajaratnam the next morning, saying: “need to reach u with some PARTICULARLY important data” before the market opened for the day…
In one email on August 21, 2008, Mr. King sent Mr. Loeb information about Apple products. There is no indication that the information was confidential or whether Mr. King knew how Mr. Loeb intended to use it.
In one call, Loeb assured Rajaratnam that the information that he was giving him went to him and another former Galleon trader alone. ” I tell a couple of guys on the Street but you guys get the first call and that’s it,” he said according to the WSJ.
It’s important to remember that none of these Goldman employees (or the bank itself) have been charged with wrongdoing. In fact, they may never be charged at all.
So we’ll see.