Gupta Found Guilty of Insider Trading

Rajat Gupta, a former director at both Goldman Sachs and Procter & Gamble, was convictedfor passing confidential information about both companies to a hedge fund that profited off positions in the stocks. He was convicted by a federal jury on two counts of securities fraud and one count of conspiracy — the fraud charges carry possible 20 year sentences, and the conspiracy charge carries a possible five year sentence.

Prosecutors accused Gupta, 63, of making phone calls to his one-time friend and business associate, Raj Rajaratnam, to give him secret financial information between March 2007 and January 2009 while serving on the boards of Goldman Sachs and Procter & Gamble Co. Rajaratnam, founder of the Galleon Group hedge fund, was convicted at trial a year ago and is serving an 11-year prison term.


Prosectures said that Galleon bought 180,000 shares of P&G on January 29, 2009 after Gupta tipped Rajaratnam about quarterly earnings before the public announcement. Gupta is a former head of the McKinsey & Co management consultancy.

Prosecutors maintain that Gupta helped Rajaratnam make millions of dollars and stood to benefit because of his investments with Rajaratnam and position as chairman of Galleon International. They said evidence in phone logs, trading records and witness testimony corroborated the circumstances in which Gupta tipped the hedge fund manager.