During closing arguments in the largest hedge fund trading case in US history, a government lawyer has described former Goldman Sachs Inc director Rajat Gupta as the “real fly” on the wall of the firm’s boardroom.

Mr Gupta, who has not been indicted in the criminal trial of Galleon Group founder Mr Raj Rajaratnam, faces civil charges from the Securities and Exchange Commission for allegedly passing confidential information about Goldman Sachs to the defendant.

The defence had previously argued that Mr Rajaratnam traded on Goldman Sachs based on information available in the public outlets like theflyonthewall.com, which provide financial news.

“You don’t trade based upon a flyonthewall report,” the Assistant US Attorney, Mr Reed Brodsky, told the jury on Wednesday.

“You trade based upon the real fly on the wall, Mr Gupta, the person who is in the Goldman board room, who knows what Goldman is really going to do,” he added.

Mr Gupta, an Indian-American, who was perched at the top of the financial world, has fallen from grace after the accusations levied against him.

Besides Goldman Sachs, he sat on the board of Procter & Gamble and was invited to the US President Mr Barack Obama’s first state dinner hosted in honour of the Prime Minister, Dr Manmohan Singh.

“Having a great reputation doesn’t give you a free pass to violate the law,” said Mr Brodsky. “No one is above the law.”

Mr Rajaratnam, 53, who has been charged with 14 counts of securities fraud and conspiracy, denies wrongdoing. If convicted, he faces up to 20 years in prison. Out of the 26 people arrested in the case, 19 have pleaded guilty.

Like Mr Rajaratnam, Mr Gupta, 62, has also denied wrongdoing.

Mr Lloyd Blankfein, CEO of Goldman Sachs, has testified that Mr Gupta had breached the firm’s confidentiality policy.

In his closing arguments, Mr Brodsky recapped Mr Gupta’s alleged tips to Mr Rajaratnam. Using phone records, he showed that 16 seconds after Mr Gupta learnt about a $5-billion investment in the firm by Warren Buffett’s Berkshire Hathaway, he called Mr Rajaratnam with the alleged tip.

Two minutes after the call on September 23, 2008, Mr Brodsky said Mr Rajaratnam made an order of $43 million worth of Goldman stock.

Mr Gupta has also been accused of calling Mr Rajaratnam in October 23, 2008 after learning that Goldman Sachs was losing $2 on a share, which led Mr Rajaratnam to sell the firm’s stock.

The lawyer reiterated the July 29, 2008 call in which Mr Rajaratnam asks Mr Gupta whether Goldman Sachs was considering acquiring a commercial bank. “Yeah there was this big discussion at the board meeting,” he replied.

“Those calls say it all,” Mr Brodsky said.

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