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.
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