Goldman director said to tip fund on Buffett deal

By Ben Rooney, staff reporter


NEW YORK (CNNMoney.com) -- A Goldman Sachs director tipped off a hedge-fund boss about a $5 billion investment from Warren Buffett's Berkshire Hathaway before it was made public in 2008, according to a report published Tuesday.

The revelation, reported by the Wall Street Journal, marks a "significant turn" in the government's case against Raj Rajaratnam, founder of the Galleon Group hedge fund, who is at the center of the largest insider-trading case in a generation.

At issue is a $5 billion investment Buffett made in Goldman Sachs in 2008. The Journal said it was a "watershed moment" in the financial crisis, in which Buffett sought to ease fears about the instability of the financial system by backing the nation's leading investment bank.

But a source told the newspaper that Rajat Gupta, the Goldman director, disclosed information about the transaction to Rajaratnam before the deal was made public.

Gupta hasn't been charged in the case against Galleon, and denies any wrongdoing in the matter. He told Goldman last month he wouldn't seek re-election as a director, according to the report.

The Journal said federal prosecutors notified Gupta in a letter that they had intercepted phone conversations between him and Rajaratnam. However, it couldn't be determined whether the wiretaped recordings included discussion of the Berkshire investment.

According to the report, Gupta and Rajaratnam were close associates and once had a business partnership together. They met frequently at Galleon's offices in New York, people familiar with the matter told the Journal. Gupta was invited to attend parties hosted by Galleon, one of those people said.

The report came as Goldman (GS, Fortune 500) faces separate charges of fraud, from the Securities and Exchange Commission, related to the 2007 sale of a collateralized debt obligation.  To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 17,172.68 -107.06 -0.62%
Nasdaq 4,527.69 -52.10 -1.14%
S&P 500 1,994.29 -16.11 -0.80%
Treasuries 2.57 -0.02 -0.81%
Data as of 6:40pm ET
Company Price Change % Change
Bank of America Corp... 17.03 0.08 0.47%
Yahoo! Inc 38.65 -2.28 -5.57%
Apple Inc 101.06 0.10 0.10%
EMC Corp 29.68 0.15 0.51%
Microsoft Corp 47.06 -0.46 -0.97%
Data as of 4:01pm ET

Sections

Ferrari is recalling 3,000 of its exotic 458 sports cars because people get trapped inside the front storage compartment. More

UPS announced Monday that it's bringing its in-store 3-D printing service to nearly 100 stores across the country. More

Big pocketed borrowers are paying lower average rates on jumbo loans and lenders are now requiring down payments of just 10% -- and, in some cases, waiving the mortgage insurance, too. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.