As Gabriel Kolko (one of the few historians who did understand regulatory economics) wrote in The Triumph of Conservatism, every major regulatory agency established in the Progressive era was established at the request of the regulated industry. There were consumer complaints of course. But the design and thrust of regulation primarily served the interests of the producers, not the consumers. This was also generally true of the whole slew of regulatory agencies created during the New Deal.

Another member of that social and investment circle could play an important role at Mr. Gupta's criminal trial for securities fraud and conspiracy, scheduled to begin May 21. Ravi Trehan, a likely witness, could buttress Mr. Gupta's argument that he had fallen out with Mr. Rajaratnam before at least four alleged inside tips that are at the crux of the prosecution, according to people familiar with the matter.

Mr. Trehan—whose potential role at Mr. Gupta's trial hasn't previously been disclosed—could testify about conflicts he and Mr. Gupta both had with Mr. Rajaratnam related to Voyager Capital Partners, the fund the three men launched together in 2005, people familiar with the case say.

In addition, Mr. Trehan, a principal at New York investment firm Broadstreet Group, could testify about a call he received from Mr. Gupta at an auspicious time. The call came in 2008 right after Mr. Gupta allegedly disclosed Goldman secrets to Mr. Rajaratnam. Mr. Trehan's lawyer says he didn't receive any information about Goldman around the time of the alleged tip and didn't trade in Goldman stock then.

"At that time he told me that Mr. Gupta had sort of confronted him with saying that he should have paid more attention—he, Mr. Rajaratnam, should have paid more attention to what was happening with Voyager and that he was very upset," Mr. Kumar said. "Mr. Gupta was very upset…he had $10 million in that Voyager that had all gone to zero."

Voyager, which Messrs. Gupta and Rajaratnam created in 2005 with Mr. Gupta's friend Ravi Trehan, was one of a number of investment ventures they entered together. Mr. Rajaratnam put in $40 million, and Messrs. Gupta and Trehan each put in $5 million. Mr. Trehan pulled out in 2006 amid conflicts with Mr. Rajaratnam.

Mr. Gupta took over Mr. Trehan's stake with a loan from Mr. Rajaratnam, bringing his investment to $10 million, according to Mr. Kumar's testimony. Mr. Trehan's lawyer declined to comment.

Mr. Gupta's conflict with Mr. Rajaratnam came much later. How much later, in the eyes of jurors, may be a key to his fate.