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Investment Firm Principal Could Bolster Gupta’s Case

  • United States

    Ravi Trehan, a principal at New York investment firm Broadstreet Group, could become a key witness helping the defense team in the trial of former McKinsey & Co. chief executive Rajat Gupta, The Wall Street Journal reported April 25.

    A former board member of Goldman Sachs Group and Procter & Gamble Co., Gupta, who has pleaded not guilty to all charges, is due to go on trial May 21 on fraud and conspiracy charges.

    It is alleged he leaked inside information about the two companies to Galleon Group founder Raj Rajaratnam, currently serving an 11-year sentence for convictions on fraud and conspiracy.

    Trehan is likely to testify that Gupta had a falling out with Rajaratnam before the time when the prosecution claims at least four of the alleged inside tips were given, people familiar with the matter told the Journal.

    Gupta, Trehan and Rajaratnam launched an investment fund, Voyager Capital Partners, together in 2005. Rajaratnam invested $40 million and the two other men initially contributed $5 million each, according to court records and people familiar with the case. Trehan pulled out in 2006, amid conflicts with Rajaratnam, and Gupta upped his stake to $10 million in 2007.

    Trehan’s testimony could support the defense assertion that Gupta and Rajaratnam had clashed by the summer of 2008 due to redemptions and management fees that the Sri Lankan-born Rajaratnam took from Voyager, the Journal said.

    Trehan, who met Gupta a decade ago when the Indian American rented a guesthouse from the former McKinsey and Co. chief in the summer, was introduced to Rajaratnam by Gupta in 2004. Trehan and Gupta are still friends, as are their wives, a person close to the case told the Journal.

    In addition, Trehan could testify about a call he received in 2008 right after Gupta allegedly disclosed inside information about Goldman to Rajaratnam.

    Trehan’s attorney, Manisha Sheth, told the Journal that her client did not receive any information about Goldman in that call and did not buy or hold any Goldman stock during 2008. Sheth said that Trehan does not remember all the details of the call but that the two men were talking about a meeting the next day about an investment.

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