Gupta on Rajaratnam's "important people" list: witness

NEW YORK (Reuters) - Former Goldman Sachs director and McKinsey & Co executive Rajat Gupta was on a list of "important people" that now-imprisoned hedge fund manager Raj Rajaratnam was willing to be disturbed to take their phone calls, his onetime secretary testified at Gupta's insider-trading trial on Tuesday.

Former Galleon Group employee Caryn Eisenberg, testifying for the prosecution, also told the Manhattan federal court jury that she saw Gupta "many times" in the firm's 34th floor Madison Avenue office in 2008 and 2009.

But defense lawyers pointed out that Gupta was not the only person associated with Goldman Sachs to be included on the list, which eventually identified 10 people during the time Eisenberg was Rajaratnam's executive assistant in 2008 and 2009.

One other name was Goldman managing director David Loeb, who works with technology hedge funds. Loeb is under investigation but has not been charged with any wrongdoing in the government's broad crackdown on insider trading, according to a source briefed on the case.

Loeb's name came out under cross-examination, part of Gupta's defense strategy to show that Rajaratnam had other potential sources of inside information about Goldman Sachs.

Loeb would call "just as frequently as the other sales guys," Eisenberg said in response to a question by one of Gupta's lawyers, David Frankel.

Gupta, 63, is the most prominent corporate figure indicted. He denies the charges, arguing the prosecution has no direct evidence such as the dozens of wiretaps used to convict Rajaratnam a year ago.

Eisenberg is the first trial witness called by prosecutors to establish the relationship between Gupta and Rajaratnam. The trial began on Monday with opening arguments.

The former secretary also testified about a call Rajaratnam received on September 23, 2008, minutes before the stock market closed. She said Rajaratnam summoned Galleon co-founder Gary Rosenbach into his office. She testified that she then heard Rosenbach saying "Buy Goldman Sachs" on his phone.

The date is key to government charges against Gupta that he leaked word of Warren Buffett's $5 billion investment in Goldman Sachs Group Inc before it was made public at the height of the financial crisis. Buffet's investment was announced after the market closed that day.

Prosecutors say Gupta called Rajaratnam 16 seconds after a special Goldman board meeting approved the investment by Buffett's Berkshire Hathaway Inc. They said Rajaratnam then ordered his traders to buy Goldman stock with just minutes left in the trading day, reaping illegal profits.

Eisenberg said the call was from "one of the men who frequently called" and that "it was urgent."

She said that her former boss Rajaratnam had instructed her "not to disturb him with any calls unless they are on a list of people considered important" so on that occasion, she did put the phone call through to Rajaratnam.

Gupta is on trial on charges of tipping Rajaratnam with confidential information between March 2007 and January 2009 while serving on the boards of Goldman Sachs and Procter & Gamble. He spent a 34-year career at management consultancy McKinsey & Co, including nine years as its global head.

The jury, which includes an elementary school teacher, a nurse and a professor, saw a handwritten list of five names - taken from Eisenberg's notebook - displayed on screens in the jury box. Five other names were added during her employment.

Under the title "important people" Gupta's name was second on the list. Two people who testified against Rajaratnam at his trial last year after pleading guilty were also identified. They were former Intel Corp executive Rajiv Goel and former McKinsey consultant Anil Kumar.

The charges of securities fraud and conspiracy could lead to a lengthy prison term for Gupta if he is convicted at the trial, which is expected to last about three weeks. However, it is unlikely to be as punishing as the 11 years handed to Rajaratnam, who was found guilty on 14 criminal charges.

Defense lawyers say Gupta and Rajaratnam had a falling out sometime in 2008 and were not as close as Rajaratnam was to other Wall Street executives. Gupta's lawyers asked Eisenberg about a one-night helicopter trip from New York to Atlantic City in February 2008. Rajaratnam traveled with Goldman Sachs President Gary Cohn and hedge fund managers but Gupta was not on the trip, she said.

The case is USA v Gupta, U.S. District Court for the Southern District of New York, No. 11-907.

(Additional reporting by Emily Flitter; Editing by Tim Dobbyn and Phil Berlowitz)

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