One of America's most high-profile insider-trading cases in recent times looked to descend into a clash between the testimonials of two South Asian-born corporate giants, convicted hedge fund boss Raj Rajaratnam and former global Managing Director of McKinsey and Company, Rajat Gupta.

Mr. Gupta, who was at the time also a Director at investment bank Goldman Sachs, is facing questions over allegations that he supplied material non-public information about Goldman to Mr. Rajaratnam's Galleon Group hedge fund. Specifically, prosecutors have alleged that on September 23, 2008 Mr. Gupta informed Mr. Rajaratnam about Berkshire Hathaway, Warren Buffet's firm, intending to invest $5 billion in Goldman.

Mr. Rajaratnam is presently serving his 11-year jail sentence in Ayer, Massachusetts. However in the lengthy case against the Wall Street titans, a former Galleon portfolio manager testified this week that Mr. Gupta actually had a dispute lasting “several months” with Mr. Rajaratnam over the $10-million that he had invested in the latter's fund.

According to arguments in court, Mr. Gupta allegedly made a $5-million investment in a Galleon fund called Voyager Capital Partners in 2005 and subsequently an additional $5 million in December 2006. The defence argued that this brought Mr. Gupta's stake in the funds to 10 per cent.

Yet according to the testimony of erstwhile Galleon employee Isvari Mahadeva, the two men clashed over the value of Mr. Gupta's profits on that investment, with Mr. Rajaratnam's interpretation implying that Mr. Gupta's stake was worth $12.7 million by the end of 2007 and Mr. Gupta insisting that it was worth “millions more,” at the time.

This disagreement comprised the core of the defence arguments this week, wherein Mr. Gupta's lawyers suggested that this dispute along with the fact that Mr. Gupta considered suing Mr. Rajaratnam when he lost his entire investment in the Voyager fund upon its collapse in 2008 implied that Mr. Gupta had no motive to supply insider information to Mr. Rajaratnam.


Wire-taps also made a reappearance in court after they had effectively been used earlier by the prosecution to seal the fate of Mr. Rajaratnam, who was noted to have made a large number of calls in which insider information had been exchanged.

This time, however, defence lawyers argued that wire taps showed that calls between Mr. Rajaratnam and David Loeb, Goldman's Head of Asia Equity Sales in New York, occurred on dates when Mr. Gupta was alleged to have tipped off Mr. Rajaratnam. This evidence, they suggested, strengthened the possibility that Mr. Loeb or others at Goldman may have leaked the information.