On the second day of Gupta's insider-trading trial in Manhattan federal court on Tuesday, prosecutors tried to establish for the jury his ties to now-imprisoned Rajaratnam, while defense lawyers sought to describe some distance between the men.

Gupta, 63, is the most prominent corporate figure indicted in a broad U.S. government crackdown on insider trading, accusing him of supplying Rajaratnam with business secrets between March 2007 and January 2009 while serving on the boards of Goldman Sachs Group Inc and Procter & Gamble.

The prosecution's first witness, a former executive assistant to Rajaratnam, confirmed Gupta was once on her boss's "important people" list. But the defense got her to acknowledge that Gupta was excluded from a fantasy football celebration helicopter trip to Atlantic City with other corporate high-flyers.

Both the secretary and a former Galleon trader testified on Tuesday about events surrounding a key trade in last October's indictment. The trial started on Monday and is expected to last three weeks.

Prosecutors contend that Gupta called Galleon Group hedge fund founder Rajaratnam 16 seconds after a special Goldman board meeting on September 23, 2008, approved a $5 billion investment by Warren Buffett's Berkshire Hathaway Inc at the height of the financial crisis.

Rajaratnam then ordered his traders to buy Goldman stock with just minutes left in the trading day, reaping about $840,000 in illegal profit, according to the charge. The investment was not made public until after the market closed.

Through the trial's first witness, former Rajaratnam executive assistant Caryn Eisenberg, the jury learned that Gupta had been on a list of about 10 people her boss was willing to be disturbed by, even at critical trading periods.

Following that instruction, she testified that she put a call through on September 23, 2008 from "one of the men who frequently called" who said "it was urgent." The phone call was from a number used by Gupta's assistant.

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Eisenberg said Rajaratnam summoned Galleon co-founder Gary Rosenbach into his office. She testified that she then heard Rosenbach saying "Buy Goldman Sachs" on his phone. Rajaratnam smiled when the market closed and the Buffet investment was the talk of the office the next day, she said.

Several Goldman Sachs executives, including chief executive Lloyd Blankfein, could testify at the trial.

Former Galleon trader Ananth Muniyappa also testified about the minutes before the market closed the same day.

Muniyappa told the jury "that Raj was either still on the phone or just getting off the phone" when he instructed him to buy 100,000 Goldman Sachs shares.

Eisenberg testified that she saw Gupta "many times" in Galleon's 34th floor Madison Avenue office in New York during 2008 and 2009. The jury heard that Gupta at one point even had an electronic security pass to the office.

Gupta, who had a 34-year career at management consultancy McKinsey & Co, including nine years as its global head, denies the charges of securities fraud and conspiracy. His lawyers argue that federal prosecutors have no direct evidence such as the dozens of wiretaps used to convict Rajaratnam a year ago.

Gupta looked tense at the defense table during the proceedings. His wife, Anita, and several family members were also in the courtroom.

In questioning Eisenberg, defense lawyer David Frankel brought out that Gupta was not the only person associated with Goldman Sachs on the "important people" list. One other name was Goldman managing director David Loeb, who works with technology hedge funds. A spokesman for Goldman declined to comment.

Part of the defense strategy is to show that Rajaratnam had other potential sources of inside information about Goldman. Loeb is under investigation but has not been charged with any wrongdoing, according to a source briefed on the case.

Defense lawyers say Gupta and Rajaratnam had a falling out sometime in 2008 and were not as close as Rajaratnam was to other Wall Street executives. Gupta's lawyers asked Eisenberg about a one-night helicopter trip from New York to the New Jersey gambling town of Atlantic City in February 2008.

Rajaratnam invited Goldman Sachs President Gary Cohn, then Goldman co-head of trading David Heller and hedge fund managers but Gupta was not asked, Eisenberg said. There is competing evidence as to whether Cohn actually went. A Goldman spokesman declined to comment.

"It was their fantasy football celebration trip ...the proceeds to go to charity," Rajaratnam's former secretary said.

The charges of securities fraud and conspiracy could lead to prison for Gupta if he is convicted. However, any sentence is unlikely to be as long as the 11 years handed to Rajaratnam.

The case is USA v Gupta, U.S. District Court for the Southern District of New York, No. 11-907.

(Additional reporting by Emily Flitter; Editing by Tim Dobbyn and Phil Berlowitz)

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