Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

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

Search for Jobs

Index Last Change % Change
Dow 19,614.81 65.19 0.33%
Nasdaq 5,417.36 23.60 0.44%
S&P 500 2,246.19 4.84 0.22%
Treasuries 2.39 0.04 1.70%
Data as of 9:02pm ET
Company Price Change % Change
Bank of America Corp... 22.95 0.38 1.68%
Chesapeake Energy Co... 7.60 0.02 0.26%
Ford Motor Co 13.03 -0.03 -0.23%
Wells Fargo & Co 57.29 0.01 0.02%
Micron Technology In... 20.66 0.22 1.08%
Data as of 4:01pm ET
Sponsors

Sections

Andy Puzder, Trump's choice for Labor secretary, thinks it's great that his restaurants use racy ads to sell hamburgers. More

Trump says he sold all his stocks in June. But what about his hedge funds? He was (and may still be) invested in three run by John Paulson, a major campaign donor. More

Sean Rad will be stepping away from his day-to-day duties as Tinder CEO in order to run Swipe Ventures. More