Goldman subpoenaed in closely watched fund case
NEW YORK
Mon May 3, 2010 5:43pm EDT
Goldman Sachs Group Inc have been served a subpoena to testify or provide information in a closely watched case of illegal insider trading allegations, according to a court document made public on Monday.
The subpoena to Goldman Sachs & Co and Goldman Sachs Execution and Clearing LP on April 15, requests "all trading records and monthly account statements associated with account number UF703881" of Michael Kimelman, a former trader at Quad Capital LLC and Incremental Capital.
Kimelman is charged in a case running parallel with the one U.S. prosecutors are pursuing against Galleon hedge fund founder Raj Rajaratnam. U.S. prosecutors described the probe as the biggest hedge fund insider trading case in U.S. history.
Kimelman was arrested and charged on November 5 along with Zvi Goffer, a onetime Galleon employee who later started the Incremental Capital trading firm, and five others. They have all pleaded not guilty to an indictment and are free on bail.
The subpoena, signed by presiding U.S. District Judge Richard Sullivan, was submitted by Kimelman's lawyer Morris Fodeman. It asks representatives of the investment bank's legal department to appear before the judge at a hearing in the case on May 14.
No further details were provided, other than that Goldman acknowledged receipt on April 19.
A spokesman for Goldman Sachs declined to comment. Lawyers for Kimelman could not immediately be reached.
The subpoena identified Kimelman as a trader with Quad and a broker with Lighthouse Financial Group.
U.S. prosecutors have accused Rajaratnam of obtaining confidential information on Goldman, but have not formally included those in the charges, according to court documents. Prosecutors said Rajaratnam sought information on Warren Buffet's Berkshire Hathaway's purchase of preferred shares in Goldman before the transaction became public on September 23, 2008.
They also said he conspired to obtain confidential information about the quarterly earnings of Goldman before public announcements on or about June 17, 2008, and December 16, 2008.
The Sri Lankan-born Rajaratnam, a U.S. citizen, has pleaded not guilty and is free on bail. His co-defendant, former New Castle Funds LLC trader Danielle Chiesi, has also pleaded not guilty. Their trial is scheduled to start on October 25 before U.S. District Judge Richard Holwell.
Eleven defendants have pleaded guilty out of 21 charged. Eight people, some of them Rajaratnam's former friends and business associates or onetime Galleon employees, have signed cooperation agreements with prosecutors.
The cases are: USA v. Goffer et al, U.S. District Court for the Southern District of New York, No. 10-056 and USA v Raj Rajaratnam and Danielle Chiesi, No. 09-01184.
(Reporting by Grant McCool and Matthew Goldstein, editing by Maureen Bavdek, Leslie Gevirtz)
