Rajat Gupta Trial: Byron Trott Says Goldman-Buffett Deal 'As Top Secret As You Could Get'

* Former Goldman banker, Buffett confidant testifies

* Prosecution evidence in ex-Goldman director's case

* Third day of trial expected to last several weeks

By Grant McCool

NEW YORK, May 23 (Reuters) - The deal that gave Goldman Sachs Group Inc a $5 billion boost from renowned investor Warren Buffett at the height of the 2008 financial crisis was "as top secret as you could get," a leading banker testified at the insider-trading trial of onetime Goldman board member Rajat Gupta.

Former Goldman banker Byron Trott, a long-time Buffett confidant, told a Manhattan federal court jury that it was policy within a tightly-knit group of executives who negotiated such deals "never to talk about confidential information in public, or elevators. It was grounds for being fired."

Called to testify by prosecutors on the third day of Gupta's trial, Trott described how the deal came together in 30 or 40 minutes on the afternoon of Sept. 23, 2008.

"Warren was not reachable until 2:30 p.m. because he was taking his four grandkids to Dairy Queen," said Trott, who left Goldman in 2009 and now runs his own merchant bank.

Gupta, 63, is accused of providing now-imprisoned Galleon Group hedge fund founder Raj Rajaratnam with boardroom secrets between March 2007 and January 2009 while serving as a director of Goldman and Procter & Gamble.

One of the allegations is that Gupta tipped Rajaratnam, his erstwhile friend and business associate, 16 seconds after the Goldman board approved the Buffett investment, which was just minutes before markets closed at 4 p.m. on Sept. 23, 2008.

Rajaratnam that day ordered his traders to buy Goldman stock, but the Buffett deal was not made public until about two hours after trading ended, according to trial evidence.

"This was about as top secret as you could get," Trott said of the negotiations that led to Buffett's investment in Goldman.

Gupta, who has pleaded not guilty to five counts of securities fraud and one count of conspiracy, sat at the defense table with his hands folded in his lap, listening to Trott.

"It was a major, major event to Goldman Sachs and to the marketplace. Five billion dollars was not easily found at this time," Trott said, alluding to the lack of liquidity as financial institutions such as Lehman Brothers failed.

William George, a director at the Goldman since 2002, is also expected to testify for the government, as is the investment bank's chief executive, Lloyd Blankfein. The trial started on Monday and is expected to last about three weeks.

Gupta could be sentenced to prison if convicted. However, any sentence is unlikely to be as long as the 11 years handed to Rajaratnam, who was convicted in the same court a year ago.

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