Seokyong Lee/Bloomberg News Rajat K. Gupta, a former director of Goldman Sachs.

8:04 p.m. | Updated

In October 2008, with the global economy hemorrhaging and his hedge fund struggling, Raj Rajaratnam sounded calm during a lunchtime call with a colleague in Singapore.

“I heard yesterday from somebody who’s on the board of Goldman Sachs that they are going to lose $2 per share,” said Mr. Rajaratnam. “The Street has them making $2.50.”

The government played that secretly recorded telephone call on Wednesday during the trial of Mr. Rajaratnam, the co-founder of the hedge fund Galleon Group, who faces up to 25 years in prison if convicted on charges that he earned millions of dollars from insider trading.

The secretly recorded conversation came a day after Goldman held a board meeting informing directors that the bank was on track to report its first quarterly loss as a public company.

Azam Ahmed and Guilbert Gates/The New York Times Click on the above graphic to get a visual overview of the Galleon information network.

The government says that Rajat K. Gupta, then a Goldman director, called Mr. Rajaratnam after the meeting and passed on the confidential information, allowing Mr. Rajaratnam to sell his Goldman position and avoid losses before its earnings announcement.

Federal prosecutors have named Mr. Gupta a co-conspirator of Mr. Rajaratnam but have not charged him criminally.

The Securities and Exchange Commission has filed a civil proceeding against Mr. Gupta accusing him of tipping Mr. Rajaratnam. Mr. Gupta’s lawyer has said his client had not done anything wrong.

When Mr. Rajaratnam told David Lau, his Singapore colleague, about Goldman’s poor performance, Mr. Lau seemed surprised.

“Really,” he said.

“So what he was telling me was that uh, Goldman, the quarter’s pretty bad. They have zero revenues because their trading revenues are offset by asset losses, and to date they have lost $2 per share,” Mr. Rajaratnam said. “I don’t think that’s built into Goldman Sachs stock price.”

The accusations against Mr. Gupta are being closely followed on Wall Street. Mr. Gupta, who ran McKinsey Company, the prestigious management consulting firm, was among the world’s most influential business executives.

Last week, Lloyd C. Blankfein, the chief executive of Goldman, took the witness stand at the trial and told the jury that it would be a breach of confidentiality for Mr. Gupta to divulge board discussions.

The Goldman call emerged during the testimony of Adam Smith, a former portfolio manager at the Galleon Group. Mr. Smith pleaded guilty to insider trading at Galleon and is testifying against his former boss as part of his cooperation agreement with the government.

During Mr. Smith’s cross-examination, Mr. Rajaratnam’s lawyers accused Mr. Smith of fabricating his illegal conduct at Galleon in order to secure a lesser sentence by helping them get “the big fish” — Mr. Rajaratnam. Mr. Smith testified that the government had caught him on a wiretap trading on inside information last year, after Galleon’s dissolution and while managing a different fund.

Defense lawyers also played a wiretapped call between Mr. Smith and Ian Horowitz, a former Galleon trader. During the call, made at the F.B.I.’s direction after Mr. Smith’s guilty plea, Mr. Smith tried unsuccessfully to gather more insider-trading evidence from Mr. Horowitz.

Mr. Smith, who testified that the F.B.I. had instructed him to lie in order to elicit incriminating information, said on the call that he believed Galleon’s trading was legitimate.

“You want the jury to believe you were lying then, but telling the truth now?” asked Terence J. Lynam, a lawyer for Mr. Rajaratnam.

“Yes,” Mr. Smith replied.

Sept. 24, 2008 transcript (U.S. vs. Rajaratnam)

Oct. 24, 2008 transcript (U.S. vs. Rajaratnam)

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