Goldman Analyst Is Said to Face Insider Trading Inquiry

A Goldman Sachs stock analyst has been drawn into the government’s sweeping investigation into insider trading at hedge funds.

Federal investigators are examining whether Henry King, a senior technology industry analyst for Goldman based in Asia, provided confidential information to the bank’s hedge fund clients, according to a person with direct knowledge of the matter who requested anonymity because he was not authorized to discuss it publicly.

Mr. King recently took a leave of absence from Goldman, according to this person.

Mr. King could not be reached for comment. A spokesman for the firm declined to comment. The Federal Bureau of Investigation declined to comment.

The Wall Street Journal reported earlier on Mr. King’s role in the investigation.

Goldman has figured prominently in the government’s insider trading inquiry. Last year, federal prosecutors charged Rajat K. Gupta, a former director of Goldman, with leaking secret boardroom discussions to Raj Rajaratnam, the former head of the Galleon Group hedge fund who is serving an 11-year prison term after a jury convicted him of insider trading crimes last May.

Mr. Gupta has denied the charges. His trial is set to begin in May.

During pretrial hearings in Mr. Gupta’s case, it emerged that there was a second insider at Goldman who was said to have leaked Mr. Rajaratnam illegal stock tips. A letter filed with the court by federal prosecutors in the Gupta case said that another unidentified Goldman executive had provided Mr. Rajaratnam with confidential information.

Judge Jed S. Rakoff, the judge presiding over the case, agreed to keep the content of the leaks under seal because they were unrelated to the charges against Mr. Gupta.

Goldman had a close relationship with Mr. Rajaratnam’s Galleon Group, which at its peak was one of the world’s largest hedge funds. The fund, which paid out more than $200 million in trading commissions annually, was one of Goldman’s largest hedge fund clients. Employees at Galleon, which primarily invested in technology stocks, regularly consulted with Mr. King on his research, said a former executive at the fund.

Galleon also aggressively hired talent away from Goldman. Many of the fund’s top traders and portfolio managers had worked at Goldman earlier in their careers.

As a research analyst based in Asia, Mr. King provided hedge funds with insights into the technology industry. Having an understanding of the supply chain in Asia, where nearly all computers, tablets and smartphones are manufactured, can give technology traders an investment edge.

In 2010, for example, Mr. King published a research note on Apple, predicting that its new iPad would be thinner and lighter, with a built-in camera.

The central role that Asian research played in technology stock investing was on full display during the Rajaratnam trial. Adam Smith, a former Galleon portfolio manager, testified that in order to gain an investment edge, he regularly traveled to Asia to meet with technology industry sources. Galleon also had an office in Singapore, and based as many as 20 employees there.

Several other banks besides Goldman Sachs have become ensnared by the government’s insider trading investigation. During the Rajaratnam trial, Mr. Smith said that Kamal Ahmed, a former banker at Morgan Stanley, had tipped him off about a pending merger.

A lawyer for Mr. Ahmed has said his client has done nothing illegal or unethical and is cooperating with the investigation.

Another insider trading case from 2010 involved an investment banker at UBS and a hedge fund trader at the Jefferies Group. The former UBS banker, Nicos Stephanou, pleaded guilty to tipping off the former Jefferies executive, Joseph Contorinis, about merger deals. A jury convicted Mr. Contorinis, who is serving a six-year prison term.