Rajat Gupta may face more charges for giving inside information to Raj Rajaratnam

NEW YORK: Rajat Gupta, the ex-Goldman Sachs Group Inc director accused of giving inside information to fund manager Raj Rajaratnam about that company and Procter & Gamble Co, may face additional allegations he passed tips, prosecutors said.

Federal prosecutors, at Gupta's arraignment on revised charges on Tuesday, also told US District Judge Jed Rakoff of a second "insider at Goldman Sachs" who provided Rajaratnam with information.

Prosecutors disclosed in a February 3 letter "certain witness statements related to an insider at Goldman Sachs, a company that provided information to Mr Rajaratnam, that did not relate to Goldman and or Procter & Gamble," Rakoff said during the hearing as he read the February 3 letter aloud. Gupta was a director at Procter & Gamble.

Gupta's lawyer, Gary Naftalis, had previously asked the government to share any evidence that Rajaratnam had an inside source at Goldman Sachs other than his client.

The defence lawyer has said the evidence may be used to show that the other source is the culprit, not Gupta.

Rakoff has also pressed prosecutors to identify the purported source, whom he called "Mr X."

Gupta, 63, pleaded not guilty yesterday to a revised indictment filed last week. The latest charges broaden the prosecutors' description of the insider-trading scheme, saying it began in March 2007, not in 2008, as the US alleged when Gupta was first charged in October.

Wildly Expanding

Naftalis said that with the new allegations, they need more time to prepare for trial.

Rakoff agreed to postpone until May 21 from its scheduled start date of April 9.

"What the government is doing here now is wildly expanding what everybody in the world believed the case to be about," Naftalis said, adding later, "I really think it's quite unfair. They can investigate my client 'til the cows come home."