New York: The Goldman Sachs CEO, Lloyd Blankfein, testified on Friday that the company's former director Mr Rajat Gupta, accused of insider trading, was not authorised to divulge 'market-moving' information he received as a board member to outsiders before the public announcements.
Blankfein, 57, returned to the witness stand on Thursday in the insider trading trial of 63-year-old India-born Gupta.
He was asked by Assistant US Attorney Reed Brodsky whether Gupta had his permission to share with people outside Goldman about what he learned at board meetings.
"Did you authorise Gupta to disclose on March 12, 2007, any information that was learned at the audit committee meeting to any outsider?" Brodsky asked.
"No," Blankfein said.
The Goldman CEO said Gupta was not authorised to disclose information either of the board's audit committee in March 2007 or other meetings where the firm discussed quarterly results before it was made public.
Gupta has been accused of sharing information he learnt while sitting on the boards of Goldman and consumer giant Proctor and Gamble with convicted Sri Lankan billionaire Raj Rajaratnam.
Prosecutors say Gupta shared with the Galleon hedge fund founder information about Warren Buffett's $5 billion investment in the banking as well as quarterly earnings seconds after he learnt about them at company board meetings.
Gupta has denied any wrongdoing.
Blankfein said the bank's audit committee is routinely briefed on the firm's profits, expenses, taxes, capital and dividend before the public release of the data.
"Was the information heard at audit committee meetings confidential?" Brodsky asked.
"It was confidential in terms of organisational and management guidelines but ostensibly because the information was very important and market-moving to the stock," Blankfein said.
"There's a lot of speculation about what results of the quarter would be. This resolves the speculation."
Blankfein also spoke about Gupta's decision in September 2008 to resign from the board and work as an adviser for financial firm KKR.
Blankfein said a news release announcing Gupta's departure was drafted but was never issued since the timing coincided with the Lehman Brothers bankruptcy.
He testified that he decided to ask Gupta to remain on the board because his departure, "might be perceived as a crisis was going on at Goldman Sachs".