* DOJ sought delay in SEC case vs ex-Goldman director
* Gupta accused of leaking tips to Galleon’s Rajaratnam
* Prosecutors introduced alleged tips at Rajaratnam trial
* Gupta once led consulting firm McKinsey & Co
By Jonathan Stempel and Matthew Goldstein
NEW YORK, July 6 (Reuters) - U.S. securities regulators’ insider-trading case against former Goldman Sachs Group Inc (GS.N) board member Rajat Gupta was put on hold after federal prosecutors intervened, documents show.
The intervention suggests continuing interest by U.S. Department of Justice prosecutors in Gupta, whom they had named as an unindicted co-conspirator in the criminal case against hedge fund billionaire Raj Rajaratnam.
On May 11, a federal jury convicted Rajaratnam, founder of the Galleon Group, of 14 securities fraud and conspiracy charges related to insider trading, including in Goldman shares. Gupta, a former chief of consulting firm McKinsey & Co, has not been criminally charged.
Gary Naftalis, a lawyer for Gupta, did not immediately respond to requests for comment on Wednesday.
A U.S. administrative law judge on June 20 delayed U.S. Securities and Exchange Commission civil proceedings against Gupta for six months, after holding a hearing on a request by prosecutors to intervene in the matter.
This delay came five days after the Justice Department filed “motions to intervene and stay the administrative proceedings” scheduled for July 18, according to the documents filed in the SEC case and viewed by Reuters.
It is not immediately clear why prosecutors asked for a delay. Much of their paperwork was filed under seal.
The U.S. Attorney’s office in New York did not immediately return a call seeking comment on Wednesday. SEC spokesman John Nester declined to comment.
Naftalis has called the SEC charges against his client “baseless,” and Gupta has brought his own lawsuit against the regulator. [ID:nN06281035]
At Rajaratnam’s trial, prosecutors played secretly recorded phone calls to show Gupta’s alleged tips to the hedge fund manager.
In one, Rajaratnam and Gupta discussed a Goldman board meeting. In another, Rajaratnam told a Galleon colleague that a Goldman director had provided him with details that the bank was on track for a surprise quarterly loss.
Prosecutors also tried to show that Rajaratnam bought Goldman shares after learning that Warren Buffett’s Berkshire Hathaway Inc planned to make a critical $5 billion investment in the Wall Street bank during the 2008 financial crisis.
Gupta also tipped Rajaratnam off about quarterly results at consumer products company Procter & Gamble Co (PG.N), where he also was a director, the SEC said. [ID:nN01159728]
The SEC has a lower burden of proof in administrative proceedings than prosecutors would in a criminal case. The Justice Department can bring criminal and civil cases. (Reporting by Matthew Goldstein and Jonathan Stempel; Editing by Martha Graybow and Lisa Von Ahn)