Legal News

Goldman CEO to Testify in Raj Trial, But What Will the Cross Exam Look Like?

By Ashby Jones

Lloyd Blankfein, the chief executive of Goldman Sachs, is all set to testify soon — possibly as early as Wednesday — in the insider-trading trial of former Galleon Group head Raj Rajaratnam.

And for now, the government is looking to make sure Blankfein gets the royal treatment on the stand.

That is, as the WSJ reports on Wednesday, the government is trying to prevent Rajaratnam’s defense team from trying to discredit Blankfein with probing questions about government investigations into Goldman. Click here for the NYT story; here for the Bloomberg story.

Federal prosecutors in Manhattan said in a filing made public Tuesday evening that Blankfein would testify about the service of former Goldman director Rajat Gupta, and what duties of confidentiality Gupta owed the bank.

Gupta was accused this month by the SEC of tipping Rajaratnam about non-public information he received as a Goldman director.

The defense team has argued that it should be able to ask Blankfein about whether he is testifying “in the hopes of obtaining a better resolution” in ongoing government investigations.

But prosecutors, in a letter Monday to U.S. District Judge Richard Holwell, said open investigations of Goldman Sachs “are of no relevance” to the trial and have no bearing on Blankfein’s credibility.

The government also told the judge that Blankfein shouldn’t be cross-examined about Goldman’s possible role in the 2008 financial crisis because the trial “is simply not the appropriate forum to delve into the highly complex causes” of the crisis and recession.

Rajaratnam’s team responded that it “has never suggested that Goldman Sachs is somehow responsible for the 2008 financial crisis.”

LBers, what do you think? On the one hand, you can understand the government not wanting his testimony to turn into one big exercise in Goldman-bashing. On the other, Blankfein’s a big boy — and the government certainly can raise point-by-point objections during the course of questioning. It also seems reasonable to Raj’s lawyers question Blankfein on his motivations for testifying, no?

Full post as published by Law Blog - WSJ.com on March 23, 2011 (boomark / email).