Government prosecutors yesterday played tapes of Galleon Group founder Raj Rajaratnam boasting of getting confidential, insider tips on Goldman Sachs.
“I heard yesterday from someone who’s on the board of Goldman Sachs that they are gonna lose $2 per share,” said Rajaratnam, on the wiretaps, as the billionaire sat nearby at the defense table, the key figure in the government’s massive insider-trading trial in Manhattan federal court.
“The Street has them making $2.50,” Rajaratnam said during the phone call with David Lau, a portfolio manager with Rajaratnam’s hedge fund, Galleon Group.
The date of the call, Oct. 24, 2008, came just one day after a Goldman board meeting to discuss the possibility of Goldman posting its first quarterly loss since becoming a public company in 1999. Last week, Goldman CEO Lloyd Blankfein took the witness stand to confirm that Wall Street was predicting a gain at the time he told the board of the loss.
“So what he was telling me was that . . . the quarter’s pretty bad,” Rajaratnam tells Lau. “They have zero revenues because their trading revenue are offset by asset losses.”
Rajaratnam says he’s hoping the stock rises to $105, in which case he’s going to sell.
“I’m gonna whack it, you know?,” he says.
The tapes were unveiled in the fourth week of the high-stakes trial during the testimony of Adam Smith, a former Galleon portfolio manager who is cooperating with the government.
Government prosecutors have alleged that the earnings leak, as well as a tip on a $5 billion investment in Goldman a month earlier, came from former Goldman director Rajat Gupta. Gupta has not been charged with wrongdoing by federal prosecutors, but he faces civil charges from the Securities and Exchange Commission.

