A former Galleon hedge fund trader on trial for insider trading waded into the river of gossip of Wall Street for tips and speculation, not secrets leaked by corporate lawyers as the government charges, his lawyer told a jury on Wednesday.

The jury heard opening arguments in the Manhattan federal court trial of Zvi Goffer, 34, who is accused of conspiracy and securities fraud along with his brother and fellow trader Emanuel Goffer, and another former trader, Michael Kimelman.

He was like a gold prospector searching for gold in a river, Zvi Goffer's lawyer, William Barzee, told the jury which is hearing the case less than a week after the overwhelming guilty verdict against Galleon Group founder Raj Rajaratnam in the same courthouse for insider trading.

Barzee told the jury that trading on tips, speculation and word of mouth is not illegal and his client listened to the river of gossip that you hear about on Wall Street to make his decisions about what to trade.

Prosecutor Andrew Fish, in his opening statement, described Goffer as the ringleader of a criminal scheme in which the men bribed two lawyers at the prominent Ropes & Gray law firm with tens of thousands of dollars for secret information on mergers and acquisitions in 2007 and 2008.

He said the men used disposable mobile phones, tried to cover up their tracks in documents and instant messages and paid informants in cash.

This is a case about corrupt securities traders, Fish told the jury, which was selected on Tuesday.

All three joined together to trade on the information received from the bribed lawyers, Fish said.

The three men were arrested and charged in November 2009, part of the government's first extensive use of phone taps in an insider trading probe -- investigative techniques normally reserved for fighting organized crime and narcotics trafficking.

RAJARATNAM CONNECTION

Goffer worked at Galleon between January and August 2008. His lawyer told the jury that Rajaratnam fired him. He was fired because he lost so much money, Barzee said.

Defense lawyers told the jury that Goffer, his brother Emanuel, 32, and Kimelman, 40, who are all married with children, started a trading firm together in 2008 called Incremental Capital.

The case of each man will be decided separately at the trial, which is expected to last up to five weeks.

Emanuel Goffer's lawyer, Michael Ross, said in his opening remarks that his client was the No. 1 trader at two firms before jointly forming Incremental Capital. The point I want to make is this: People can be successful by making the right guesses.

Kimelman's lawyer, Michael Sommer, in an impassioned opening statement, ridiculed the government's allegations against his client, repeatedly saying he was not guilty.

Nothing on tape, nothing from an informant, no throwaway phone, no payments. It's simple, said Sommer, who showed the jury a large chart of all nine people accused in the indictment. The other six have pleaded guilty.

Last Wednesday, a jury convicted Rajaratnam on all 14 counts of insider trading conspiracy and securities fraud with which he was charged. The once high profile money manager is under house arrest until sentencing on July 29.

The case is USA v Zvi Goffer et al, U.S. District Court for the Southern District of New York, No. 10-00056.

(Reporting by Grant McCool, editing by Dave Zimmerman)

Raj Rajaratnam Insider trading