Goldman Sachs CEO Lloyd Blankfein testified today that the company’s former director Rajat Gupta, accused of insider trading, was not authorised to divulge ‘market-moving’ information he received as a board member to outsiders before the public announcements.

Mr. Blankfein, 57, returned to the witness stand yesterday in the insider trading trial of 63-year-old India-born Gupta.

He was asked by Assistant U.S. Attorney Reed Brodsky whether Mr. Gupta had his permission to share with people outside Goldman about what he learned at board meetings.

“Did you authorise Gupta to disclose on March 12, 2007, any information that was learned at the audit committee meeting to any outsider?” Mr. Brodsky asked. “No,” Mr. Blankfein said.

The Goldman CEO said Mr. Gupta was not authorised to disclose information either of the board’s audit committee in March 2007 or other meetings where the firm discussed quarterly results before it was made public.

Mr. Gupta has been accused of sharing information he learnt while sitting on the boards of Goldman and consumer giant Proctor and Gamble with convicted Sri Lankan billionaire Raj Rajaratnam.

Mr. Gupta has denied any wrongdoing.

Mr. Blankfein said the bank’s audit committee is routinely briefed on the firm’s profits, expenses, taxes, capital and dividend before the public release of the data.

“Was the information heard at audit committee meetings confidential?” Mr. Brodsky asked.

“It was confidential in terms of organisational and management guidelines but ostensibly because the information was very important and market-moving to the stock,” Mr. Blankfein said.

“There’s a lot of speculation about what results of the quarter would be. This resolves the speculation”.

Mr. Blankfein also spoke about Mr. Gupta’s decision in September 2008 to resign from the board and work as an adviser for financial firm KKR.

Mr. Blankfein said a news release announcing Mr. Gupta’s departure was drafted but was never issued since the timing coincided with the Lehman Brothers bankruptcy.

He testified that he decided to ask Mr. Gupta to remain on the board because his departure, “might be perceived as a crisis was going on at Goldman Sachs”.

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