Gupta Judge Limits Release of Data on Second Goldman Tipper

April 24 (Bloomberg) -- The judge presiding over the prosecution of former Goldman Sachs Group Inc. director Rajat Gupta limited the release of information about a second employee of the bank passing tips to Galleon Group LLC co-founder Raj Rajaratnam.

U.S. District Judge Jed Rakoff, in New York, ordered that none of the material turned over to Gupta’s lawyers about a criminal probe of the Goldman Sachs employee can be made public, and it can only be used to defend Gupta in this case.

The U.S. notified Rakoff at an April 20 hearing that federal prosecutors in Los Angeles are investigating the unidentified Goldman Sachs employee. In January, prosecutors disclosed that Rajaratnam had another source who passed him inside information, a Goldman Sachs executive Rakoff dubbed “Mr. X.” The government said those tips weren’t related to the crimes Gupta is charged with.

All material produced by the prosecutors in Los Angeles that isn’t publicly available otherwise is “restricted information and will be designated as such upon production by the government,” Rakoff said in an order signed yesterday and made public today.

Rakoff also said the material must be returned to the government at the conclusion of the trial. The order was agreed to by Alan Friedman, one of Gupta’s lawyers, and Assistant U.S. Attorney Reed Brodsky, who is prosecuting the case.

Illegal Tips

Gupta, a former Goldman Sachs director, is scheduled to go on trial May 21, accused leaking illegal tips to Rajaratnam about the bank holding company as well as Procter & Gamble Co., where Gupta was also a director. He pleaded not guilty to six counts of securities fraud and one count of conspiracy.

Gary Naftalis, Gupta’s lead lawyer, has sought information from the government about Rajaratnam’s sources of illegal tips from Goldman Sachs. Naftalis, who argues the “wrong man” is on trial, has said there’s evidence that the “Goldman Sachs executive” was caught on a wiretap leaking information to Rajaratnam about Apple Inc. and Intel Corp.

Naftalis didn’t immediately return a voicemail message left at his office seeking comment on Rakoff’s order.

Naftalis said at the April 20 hearing that he had been told by Brodsky that prosecutors in Los Angeles were “conducting an investigation involving another Goldman Sachs person.”

‘Additional Source’

“We obviously would request of the government to get us any and all information relating to this additional source that Mr. Raj Rajaratnam had at Goldman Sachs of nonpublic information as soon as possible,” Naftalis said at the hearing.

Brodsky gave Rakoff a copy of the letter he had sent Naftalis informing him of the probe.

Such evidence about Goldman tippers may show one of Rajaratam’s other sources was the real culprit and not Gupta, Naftalis has said.

Rakoff at the April 20 hearing pressed prosecutors to provide the defense with the name of “Mr. X.” He also quoted from a letter Brodsky sent U.S. Attorney Andre Birotte Jr. in Los Angeles him to provide the Gupta’s defense team with documents and other information.

The case is U.S. v. Gupta, 11-cr-00907, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Patricia Hurtado in New York at

To contact the editor responsible for this story: Michael Hytha at