March 18, 2012
Hearing Reveals Intel, Apple Secrets May Have Been Leaked
An unidentified person at the Goldman Sachs Group has been accused of leaking secrets about tech giants Intel and Apple as part of the trial of another former executive of the investment banking and securities firm.
According to Reuters reporter Grant McCool, the individual, who has not been identified or charged with any crimes, had been caught on a wiretap revealing confidential information about both corporations to Raj Rajaratnam, the founder of the Galleon Group hedge fund who was convicted of insider-trading charges in 2011.The accusations were made by Gary Naftalis, lawyer for former Goldman board member Rajat Gupta, during what McCool refers to as a "heated exchange" with prosecutors during a pre-trial hearing. Naftalis is defending Gupta against charges of insider trading. Gupta is accused of sharing Goldman Sachs and Procter & Gamble secrets with Rajaratnam, and is currently scheduled to face trail beginning in May.
Ars Technica's Jacqui Cheng reported Saturday that Naftalis mentioned the alleged Apple and Intel information leak during arguments that the unidentified individual, and not his client, should be the one facing trial.
"[T]he government had a person who provided confidential information to Raj Rajaratnam about Apple and Intel," the lawyer was quoted saying, according to the Ars Technica reporter. "[T]here is a much more circumstantial case that person should be sitting in the box rather than us."
"The wrong man is on trial," Naftalis added, according to Peter Lattman of the New York Times, who also reported that Gutpa's lawyers are expected to use evidence related to those leaks in order to claim that prosecutors are falsely accusing the former executive of wrongdoing.
At the heart of the controversy, reports Patricia Hurtado of Bloomberg Businessweek, is a letter sent by prosecutors to US District Court Judge Jed Rakoff on February 3. In that letter, they told Rakoff, the presiding judge on the case, that there was a second insider at Goldman Sachs who had been leaking tips to Rajaratnam--an individual identified only as "Mr. X."
“There are wiretaps, wiretaps that they´ve had for years, that this confidential information is being given out,” Naftalis said, according to Bloomberg. "They know that there is a person at Goldman Sachs who has leaked inside information on at least two securities, on Apple and Intel, to Mr. Rajaratnam. It is certainly clear to us this is hot information. We intend to press on this issue."
Naftalis and prosecutors declined Hurtado's request for comment following the pre-trial hearing, while Goldman Sachs spokesman Michael DuVally declined a similar request from McCool.