The Securities and Exchange Commission charged Rajat K. Gupta, former director of Goldman Sachs and Proctor & Gamble, and former head of McKinsey & Co., with insider trading, according to a Wall Street Journal article by Chad Bray entitled “SEC Sues Ex-Goldman Director in Insider-Trading Case.”
Gupta allegedly called his friend and business associate Raj Rajaratnam, the founder of Galleon Group (hedge funds), and told him about a $5 billion investment in Goldman by Warren Buffett’s Berkshire Hathaway Inc. before that information was made public. Within a minute after the call, Mr. Rajaratnam allegedly arranged for Galleon funds to purchase more than 175,000 Goldman shares. Rajaratnam allegedly liquidated his holdings the day after the information became public, making $900,000 in illegal profits.
Gupta also allegedly gave Rajaratnam other confidential information regarding Goldman and Proctor & Gamble. Again, Rajaratnam allegedly used the inside information in trading some of Galleon’s hedge funds, and tipped others at his firm who then traded on it. Such trading generated over $18 million in illicit profits and loss avoidance, according to the SEC.
Gupta had himself invested in some Galleon hedge funds, and had other business dealings with Rajaratnam. The SEC previously charged Rajaratnam with insider trading involving the Galleon hedge funds. Rajaratnam is reportedly one of 26 persons charged in a broad criminal insider-trading probe. So far, 19 have pleaded guilty.
“Gupta was honored with the highest trust of leading public companies, and he betrayed that trust by disclosing their most sensitive and valuable secrets,” Robert Khuzami, director of the SEC’s Division of Enforcement, was quoted as saying, adding: “Directors who violate the sanctity of board room confidences for private gain will be held to account for their illegal actions.”
Page Perry has over 125 years collective experience representing institutional and individual investors in securities-related litigation and arbitration all over the country. While past results are not indicative of future success, Page Perry’s attorneys have recovered over $1,000,000 for clients on more than 40 occasions.