Goldman Sachs Finds More Unwanted Publicity in Gupta Case
In the SEC lawsuit, Gupta’s lawyers have said that Blankfein, Chief Financial Officer David Viniar, President Gary Cohn, Loeb and retiring Lead Director John Bryan may have information “relevant” to the defense. Another possible witness is Goldman Sachs director Claes Dahlback, a former CEO of Sweden’s Investor AB, who was interviewed by the government, prosecutors told a judge in January.
Naftalis declined to comment on his possible witnesses.
Goldman Sachs’s relationship with Galleon may also come into view. Gupta is alleged to have tipped Rajaratnam in 2007 after listening to a Goldman Sachs board meeting while at Galleon’s offices. Jurors may hear that Goldman Sachs routinely catered lunch for Galleon traders, as the bank did for other big clients, according to an ex-Galleon employee who declined to comment publicly.
Anthony Sabino, a lawyer and professor at the Peter J. Tobin College of Business at St. John’s University in New York, said the publicity will sting even if it doesn’t cost the firm business.
“If you want to do a deal these days in the U.S., you go to Goldman, you go to Morgan Stanley,” he said in a telephone interview. “But when you have multiple instances, then people may say it’s indicative of a lack of internal controls or a permissiveness that lets this thing go on. It’s a slap in the face to management.”
Ronn Torossian, CEO of 5WPR LLC in New York, which has done work for Coca-Cola Co. (KO) (KO) and McDonald’s Corp. (MCD) (MCD), said Goldman Sachs should move quickly to reclaim its reputation.
The company should stress to the public that recent events involve just a few of its 32,000 employees and that it demands that all employees act ethically, he said. Workers must be “completely above-board,” he said, not even “cheating in their pickup basketball games.”
“Any time you have a stellar firm like that and the words ‘insider trading’ next to it — you start to wonder how long does it go, how much more is there?” he said in a telephone interview. “It’s hard to distance yourself from crisis.”
For more information about Ronn Torossian, visit on to http://ronntorossianfoundation.com/