Judge Throws A Wrench In Rajat Legal Team's 'You've Got The Wrong Guy' Defense

Over the course of the Rajat Gupta insider trading trial, attorneys for the former Goldman Sachs director have attempted to show that while their client was privy to material non-public information about, among others, Goldman and Procter & Gamble, and had an established relationship with Raj Rajaratnam, the hedge fund manager currently doing eleven years for trading on material non-public information, their client had no role in helping Raj-Raj score his ill-gotten gains. Last Monday the defense put a witness on the stand who told the jury that while once close, Gupta wasn't even invited to Rajaratnam's "lavish 50th birthday party that took place in Kenya," ergo there is no way Rajat would've shared inside info with the guy. This week, the team was hoping to play wiretaps of conversations that took place between Rajaratnam and Goldman executive David Loeb, who they claim is the guy who actually tipped off the Galleon manager. Unfortunately: Rajat Gupta, the former Goldman Sachs Group director accused of insider trading, lost a bid to have a jury hear wiretaps of Goldman Sachs executive David Loeb tipping Galleon Group LLC co-founder Raj Rajaratnam...Rajaratnam got some of his illegal tips from Loeb, Goldman Sachs’s head of Asia equity sales in New York, defense attorney Gary Naftalis has said in court. The lawyer has argued to the jury that the “wrong man” is on trial...“This is an attempt to prove an alternative view of the underlying facts and blatant hearsay,” Judge Rakoff told Gupta’s lawyers. Gupta Loses Bid on Wiretaps of Goldman’s Loeb, Rajaratnam [Bloomberg] Related: Maybe Rajat Gupta Just Wanted Raj Rajaratnam To Console Him Over Goldman’s 3Q2008 Loss, Not Go And Trade On It
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Over the course of the Rajat Gupta insider trading trial, attorneys for the former Goldman Sachs director have attempted to show that while their client was privy to material non-public information about, among others, Goldman and Procter & Gamble, and had an established relationship with Raj Rajaratnam, the hedge fund manager currently doing eleven years for trading on material non-public information, their client had no role in helping Raj-Raj score his ill-gotten gains. Last Monday the defense put a witness on the stand who told the jury that while once close, Gupta wasn't even invited to Rajaratnam's "lavish 50th birthday party that took place in Kenya," ergo there is no way Rajat would've shared inside info with the guy. This week, the team was hoping to play wiretaps of conversations that took place between Rajaratnam and Goldman executive David Loeb, who they claim is the actual person who tipped off the Galleon manager. Unfortunately:

Rajat Gupta, the former Goldman Sachs Group director accused of insider trading, lost a bid to have a jury hear wiretaps of Goldman Sachs executive David Loeb tipping Galleon Group LLC co-founder Raj Rajaratnam...Rajaratnam got some of his illegal tips from Loeb, Goldman Sachs’s head of Asia equity sales in New York, defense attorney Gary Naftalis has said in court. The lawyer has argued to the jury that the “wrong man” is on trial...“This is an attempt to prove an alternative view of the underlying facts and blatant hearsay,” Judge Rakoff told Gupta’s lawyers.

Regardless of the setback, the birthday party invite or lack thereof seems like it should be enough to go on re: Gupta not having warm and cuddly buddy-buddy you scratch my back I'll scratch yours feelings for his former friend. You don't recover from that kind of snub. Rajaratnam would've been staring at the business end of a hissy fit for years.

Gupta Loses Bid on Wiretaps of Goldman’s Loeb, Rajaratnam [Bloomberg]
Related: Maybe Rajat Gupta Just Wanted Raj Rajaratnam To Console Him Over Goldman’s 3Q2008 Loss, Not Go And Trade On It

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Rajat Gupta Defense Team: You Think Our Client Would Pass Inside Information To A Guy Who Didn't Even Have The Decency To Invite Him To His Birthday Party?

What motivates people to share material non-public information with a person they know will use it for profit? For some, it's simply about greed. For others, it's about the thrill. For yet others, it's about pillow talk. For Rajat Gupta, the McKinsey director currently on trial for allegedly passing inside information to Raj Rajaratnam, it's about friendship, according to prosecutors who are trying to make the case that Raj and Rajat were the best of buds and that's what buds do. They they back each other up when they drunkenly hit on the girlfriend of the wrong guy at the bar, they stand up as best men at each others' weddings, they pick up the phone and say "Buy GS" when they know for a fact Warren Buffett is about to do so, too. And although attorneys representing Gupta don't deny the two were thick as thieves, they argue that while perhaps back in the day Rajat would have provided useful information to Raj, there is no way he would have done so after Big R twice violated the bonds of friendship. In the first instance, there was this: Defense attorneys have argued that Messrs. Gupta and Rajaratnam had a falling out in fall 2008 after Mr. Gupta lost his entire $10 million investment in a fund managed by Mr. Rajaratnam and therefore wouldn't have passed along inside information...The precise timing of their relationship's deterioration could be crucial in proving Mr. Gupta's guilt or raising doubts in the minds of jurors about whether he conspired to commit securities fraud...Defense attorneys have said Mr. Gupta was furious at Mr. Rajaratnam in the fall of 2008, when Mr. Gupta's $10 million investment in a fund called Voyager Capital Partners Ltd. evaporated. According to Mr. Kumar's testimony, Mr. Gupta felt Mr. Rajaratnam's negligence had allowed Voyager to collapse. And then this happened:

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