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Ex-Goldman Director Gupta Charged in Insider Case

Category: Frauds & Scandals


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Ex-Goldman Director Gupta Charged in Insider Case

Wednesday, October 26, 2011 4:30 PM / By MICHAEL ROTHFELD, SUSAN PULLIAM and CHAD BRAY

 

Rajat K. Gupta, the highest-ranking corporate executive to become embroiled in a push by the government to root out insider trading, was accused Wednesday of leaking confidential information while serving as a director at Goldman Sachs Group Inc. and Procter & Gamble Co.
 

In a six-count indictment, federal prosecutors in Manhattan alleged that Mr. Gupta, the former head of global consulting firm McKinsey & Co., leaked details about the companies' financial condition and an investment by Warren Buffett's Berkshire Hathway Inc. to former hedge-fund titan Raj Rajaratnam, who was sentenced earlier this month to serve 11 years in prison for insider trading.
 

Mr. Gupta, 62 years old, surrendered to the Federal Bureau of Investigation on Wednesday morning and is expected to appear in federal court in Manhattan later Wednesday.
 

The charges against Mr. Gupta come amid the government's unprecedented crackdown on what it describes as rampant illegal trading on Wall Street. Since late 2009, federal prosecutors in Manhattan have charged 55 individuals with insider trading, resulting in 51 convictions or guilty pleas.
 

Gary Naftalis, Mr. Gupta's lawyer, has said in a statement that Mr. Gupta is innocent and "has always acted with honesty and integrity." Mr. Gupta "did not trade in any securities, did not tip Mr. Rajaratnam so he could trade, and did not share in any profits as part of any quid pro quo," Mr. Naftalis said, adding that he would fight any charges.
 

Manhattan U.S. Attorney Preet Bharara said, "Rajat Gupta was entrusted by some of the premier institutions of American business to sit inside their boardrooms, among their executives and directors, and receive their confidential information so that he could give advice and counsel for the benefit of their shareholders. As alleged, he broke that trust and instead became the illegal eyes and ears in the boardroom for his friend and business associate, Raj Rajaratnam. "

 

 

Source: WSJ

 

 



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