[ by Howard Haykin ] On Thursday, the fourth day Rajat Gupta's insider trading trial, federal prosecutors introduced FBI wiretaps, e-mail, phone records, and the testimony of a Goldman Sachs Group director, to draw a picture for jurors of events that led to the insider-trading trial of onetime corporate star Rajat Gupta. The 63-year-old Gupta is accused of providing now-imprisoned hedge fund manager Raj Rajaratnam with boardroom secrets between March 2007 and January 2009 while he was a director of Goldman Sachs and Procter & Gamble Co. Gupta, the onetime head of McKinsey & Co management consultancy, is the most prominent corporate figure indicted in a broad U.S. government crackdown on insider trading in recent years in which dozens have been convicted.  He denies the charges and says prosecutors have no direct evidence. Goldman Board Member Testifies. William George, who's served on the Goldman board since 2002, affirmed on the witness stand that the investment bank's policy prohibited discussion of board meetings with outsiders. He confirmed that a 6/28/08 board meeting at the Hotel Astoria in St. Petersburg, Russia, had included discussion of Goldman possibly acquiring a commercial bank. Rajaratnam and Gupta were recorded on a wiretap a month later talking about it, but that is not included in the indictment. What is included in the indictment among the 6 charges, is the prosecutors contention that Gupta tipped Rajaratnam, in an illegal breach of his fiduciary duties, about a deal on 9/23/08 that gave Goldman a $5 billion boost from renowned investor Warren Buffett's Berkshire Hathaway Inc. at the time the markets were in crisis. One of the government's next witnesses - on Friday or early next week - will be former McKinsey manager Anil Kumar, who was once friends with both Gupta and Rajaratnam. Kumar pled guilty to criminal charges and testified against the hedge fund manager at his trial a year ago. Phone Records. In testimony on Thursday, a McKinsey technology and security manager confirmed phone records of calls made on 9/23/08 by Gupta from an office he still had at McKinsey in New York.  The office was provided as a courtesy to former managing directors. McKinsey has since severed relations with Gupta. The jury was shown a document detailing the time he called into a special Goldman board meeting (conference call) convened to approve the Buffet deal.  When the call ended, at about 3.53 p.m. New York time, Gupta dialed Rajaratnam at Galleon Group, the document showed.  Gupta's call to Rajaratnam ended at about 3:55 p.m.  There is no FBI wiretap of this latter call, but prosecutors played the jury a conversation recorded early the next morning between Rajaratnam and his principal trader, Ian Horowitz.

Rajaratnam to Horowitz: "I got a call, right, saying something good's gonna happen." Horowitz was not in the office the prior day, when Gupta phoned Rajaratnam. Rajaratnam continues speaking to Horowitz: Rajaratnam said something tot the effect that it was 3:58 - just two minutes before markets closed - when he ordered traders to buy Goldman shares. Galleon made about $840,000 in illegal profits.

Prosecutors, who played a tapped phone call on Wednesday of Gupta and Rajaratnam casually discussing business in July 2008, on Thursday presented email as evidence of their friendship.  For example:

On 2/10/07, Gupta responds to an email from McKinsey & Co director Marshall Lux, who wrote to tell him he had joined the board of the Harlem Children's Zone, a charity that Rajaratnam supported.  Rajat Gupta replies, "Congratulations... Raj is one of the most outstanding hedge fund managers and a very close friend."

Rajaratnam, whose firm had $7 billion under management at its peak, was convicted of 14 criminal charges.  He is serving a prison term of 11 years. Federal prosecutors further allege that Gupta told the hedge fund manager about the sale of P&G's Folgers coffee unit to J.M. Smucker Co for $3 billion before that company's 6/4/08 public announcement of the deal.  J.M. Smucker Co-CFO Mark Belgya testified that details were intended to be kept confidential until a joint press release by the companies. The case is USA v. Gupta, U.S. District Court for the Southern District of New York, No. 11-907. For further details, go to: [Reuters. 5/24/12].