Rajaratnam sought tips on Berkshire's Goldman buys

Galleon Group founder Raj Rajaratnam, who faces federal insider trading charges, sought to acquire secret information about Berkshire Hathaway’s 2008 purchase of preferred shares in Goldman Sachs Group, federal prosecutors said in a court filing.

A letter from federal prosecutors to Rajaratnam’s lawyers detailing new allegations of insider trading was made public yesterday in a filing in federal court in Manhattan. In it, prosecutors elaborated on an earlier claim that Rajaratnam tried to use confidential information to trade on Goldman Sachs stock.

Prosecutors are probing whether Rajaratnam received confidential tips from Goldman Sachs Director Rajat Gupta, the Wall Street Journal reported. Gupta is a former worldwide managing director at McKinsey & Co Inc.

Ed Canaday, a spokesman for Goldman Sachs, didn’t immediately respond to an e-mail seeking comment.

Yesterday’s filing identifies some of the alleged sources of Rajaratnam’s tips, including Anil Kumar, a former McKinsey & Co director, ex-Intel Corp managing director Rajiv Goel, and former hedge fund manager Ali Far. They have pleaded guilty. Many other alleged sources aren’t disclosed.

Rajaratnam “conspired to obtain material, non-public information about the quarterly earnings of Goldman Sachs” before its public announcement of earnings in June 2008 and December 2008, according to the letter. “In addition, Rajaratnam conspired to obtain material, non-public information about the purchase by Berkshire Hathaway of preferred stock in Goldman prior to Goldman’s public announcement” on September 3, 2008, prosecutors said.

Lawyers for Rajaratnam are asking a judge to exclude evidence of additional allegations of insider trading, saying prosecutors waited too long to disclose it.

The filing doesn’t identify Rajaratnam’s source for information about Goldman Sachs. It does provide details about other alleged efforts to obtain inside information.

“The allegation is false,” said Jim McCarthy, a spokesman for Rajaratnam.

Rajaratnam asked US District Judge Rich Holwell yesterday to exclude from the case evidence that he and his co-conspirators engaged in newly identified transactions involving the stock of 23 companies, including Goldman Sachs, Cisco Systems Inc and AT&T Inc. Those companies were listed by prosecutors in letters dated March 22 and April 14.

“The new allegations effectively triple the size of this case some six months after its inception and just two months after the government represented to the court that the parties could be ready for trial in June,” lawyers for Rajaratnam said in papers filed yesterday.

Rajaratnam, who was arrested October 16, is the central figure in a probe in which 21 people have been charged criminally.

Rajaratnam sought advance tips on the 2008 closing of the acquisition of Clear Channel Communications Inc by Bain Capital LLC and Thomas H. Lee Partners LP, according to the filing. He got the information from Zvi Goffer, a hedge fund trader who is also charged in the case. Prosecutors said Goffer got the information from two lawyers working at the Ropes & Gray LLP law firm. Goffer has denied wrongdoing.