Eric Piermont | AFP | Getty Images Rajat Gupta

A wiretapped telephone conversation played earlier this week during the trial of Galleon founder Raj Rajaratnam reveals then-Goldman Sachs director Rajat Gupta disclosing confidential board information to Rajaratnam in 2008.

Oddly enough, it may wind up being the best defense Gupta has against civil charges of insider trading.

Gupta faces a civil complaint from the SEC alleging that he leaked information from the boards of Goldman Sachs

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[GS  Loading...      ()   ] and Procter & Gamble

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[PG  Loading...      ()   ] to Rajaratnam. His lawyer has denied any wrong doing.

On the tape played yesterday, the world heard Gupta tell Rajatatnam that Goldman was mulling an acquisition of either Wachovia or American International Group.

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Now this is clearly a breach of Gupta’s duty of confidentiality as a board member. But it may establish grounds for a defense against the SEC charges because, at least in this conversation, is appears that Gupta wasn’t leaking as part of an insider trading scheme—but to help Rajaratnam prepare for a meeting with Goldman president Gary Cohn.

“I called you because I am meeting with Gary Cohn on Thursday,” Rajartanam said, according to the transcript published on DealBook. He then asks Gupta about a rumor that Goldman was looking to buy a commercial bank.

What follows is a conversation between the two men about the board of Goldman considering acquiring another financial institution. Goldman was looking to explore more global sources of funding, as were many investment banks in 2008.

A commercial bank offered the attraction of cheap funding in terms of deposits but there were concerns at Goldman about losses at commercial banks. Gupta describes the Goldman view as “very bearish on the commercial banks.” He tells Rajaratnam that there’s no deal imminent.

Rajaratnam’s response isn’t to talk about how he’s going to trade on this information. It’s about how he is going to use it to sound smart in a conversation with Cohn.

“Right. O.K. That was one that I wanted to just, you know, see whether there was any thoughts on that. But it gotta be a good discussion point. I’m goint to start by saying how do you see the future of financial services firms, the winners, right?” Rajaratnam says.

“Yeah. Yeah,” Gupta replies.

“You know, (Exhales) can they just fund for short term? Commercial paper or do they need desposits and insurance and things like that,” Rajartanam says, still rehearsing his conversation with Cohn. “Because there are some values out there … AIG and Wachovia and see what he, you know, says.”

It’s very clear from this conversation that Rajaratnam was leading Gupta to believe that he wanted this information not for trading but for conversational points. In fact, it sounds very much like that’s what Rajaratnam was after.

How could this clear Gupta? Well, Gupta can only be found to have participated in an insider trading scheme if he expected Rajaratnam was going to trade on the information he got. But these conversations might show that Gupta was in the habit of talking to Rajaratnam about board meetings with know expectations that Raj would trade on the information.

This won’t help Gupta’s reputation. He’s clearly spilling the beans to his hedge fund manager pal. But it may help clear him of the insider trading charges.

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