Rajat Gupta, Former Goldman Sachs Board Member, Accused Of Insider Trading By SEC

Goldman Sachs former director Rajat K. Gupta has been charged with insider trading by the Securities and Exchange Commission, for allegedly giving a hedge fund manager secret information about the bank's financial health.

Gupta, who left the Goldman board of directors last year, has been accused of participating in a $18 million insider trading scandal. He allegedly tipped off indicted Galleon Group founder Raj Rajaratnam twice in 2008, allowing the hedge fund to reap millions. The case is the latest example of the SEC's ramped-up effort to root out insider trading, and it constitutes a significant embarrassment for Goldman Sachs.

Gupta told Rajaratnam that Goldman was in better shape than expected, before second quarter earnings were announced in 2008, the SEC says. He also told the hedge fund manager that Warren Buffet's company Berkshire Hathaway was investing $5 billion in the bank, before that information was made public, according to the SEC's complaint.

Gupta, who was formerly the head of consulting giant McKinsey & Co., also sat on the board of directors of Procter & Gamble, and he stands accused of passing Rajaratnam secret information about that company as well.

The SEC previously charged Rajaratnam with insider trading. The billionaire hedge fund manager has pleaded not guilty.

After it came out last spring that the government was examining whether Gupta had shared secret information, Gupta left the Goldman board.

From Robert Khuzami, the SEC's director of enforcement:

"Gupta was honored with the highest trust of leading public companies, and he betrayed that trust by disclosing their most sensitive and valuable secrets."

READ the complaint below:

33-9192

Comments

[builderman55]

11:10 AM on 03/07/2011

Say it ain't so... Fraud on Wall Street?? Where will the GOP go now for their heroes and role models?

[Lauteur Calme]

10:38 PM on 03/02/2011

As a distant observer, I'm curious to know if people in the U.S. fully understand the massive fraud and corrupt collaborat­ion between U.S. politician­s and Wall St. that has wreaked havoc upon the world?

It is simply astounding and beyond belief! Many innocent people who understand little about the complexity of the world monetary system which is controlled by the U.S., Fed, and its Wall St. cronies, tragically end up suffering the most.

Those who fully understand this complexity also benefit the most. Neverthele­ss, the global money system is manipulate­d by a few at the expense of the many. And yet, while brave Egyptians and Tunisians desperatel­y try to restore some sanity to political and economic life in their countries, the U.S. continues to export inflation throughout the world by its monetary policy of QE2. This form of financial socialism only benefits the rich and powerful, while war and domestic upheaval only distracts people from economic problems!

After the collapse of the financial markets, the taxpayers were left to pick up the losses. The Federal Reserve bank and U.S. government spent unprecedented amounts of taxpayer money to bail out Wall St. bankers who were motivated by greed to rape and pillage the global financial system by becoming over leveraged and taking astonishing risks!

The con game by the U.S. and Wall Street is over, and perhaps Europe, China, and the U.S. can learn something from these brave Egyptians and Tunisians!

[Caesar007]

09:10 PM on 03/02/2011

The common man in America is tired of these scandals. The SEC must slap severe civil penalties to bankrupt Mr. Gupta. His tony Westport Connecticut mansion on 5 acres need to go. These crooks must be taught a lesson.

[SitandStay]

08:04 PM on 03/02/2011

This better be just the beginning. I shake to think what would have continued if it had not been for one particular Academy Award.

"Inside Job" was kept out of the media. It would have made Joe McCarthy proud!

[SitandStay]

07:50 PM on 03/02/2011

With laws as old as 1933, 1934, 1940....and laws written in that the banks attorneys-lobbyiists trotted over to our representatives to have written in for their benefit, this will be interesting.
See Inside Job. It is a revelation, of just how they did exactly that. We need to prosecute the lobbyists that were attorneys, disbar them. We do not need anyone of that ilk forming our laws. And find out which corporation they were working for, and prosecute.
No laws should be passed for or by any corporation. We are a nation of people, first and foremost. Corporations are not deserving of rights, ONLY PEOPLE.

[SitandStay]

07:41 PM on 03/02/2011

Can America survive without being a fraud? Hmmmmm.
I want these b@ztards in jail and crocheting freakin' ponchos! When enough ponchos they made are sold to repay their fraudulently obtained money, then let them out with nothing more than what they had as a twenty year old. START OVER, T00LS.

[Batland]

04:06 PM on 03/02/2011

Wow the SEC is smokin' now!

[snippylee]

03:50 PM on 03/02/2011

Well, I guess it is a start. Howeverm it is woefully inadequate given the destruction of the last 2 years.

[BeerLover]

01:43 PM on 03/02/2011

Oh look! They finally found ONE sacrifical lamb among the hundreds of crooks. I already feel relief..... no, NOT really.

[Batland]

04:02 PM on 03/02/2011

Martha Stewart and how rightous these big boys got...she got the slammer! She was the worst apple in the Wall Street bushel! Blame HER, after all she was a jail bird for insider trading. geesh! Those good old boys have families to feed, pumping retirement funds with junk mortgages of the little guy is necessary to bank roll their next wants in life. Hay somebody has to end up with all those rotten eggs!

[dlbnext]

12:30 PM on 03/02/2011

This guy was on obama's guest list last year for a party.

mean while: Mar 2, 2011
WHITE HOUSE SHOWBIZ TODAY: Obama to award 20 arts, humanities medals; Quincy Jones, James Taylor, Meryl Streep...

and
Announced Job Cuts 'Rose 20% From Year Ago'...

[leftword]

10:56 AM on 03/02/2011

So they've chosen a sacrificial lamb. Don't we all feel better now? Your regulatory agencies are working for you!

Prediction: if convicted Gupta will have to spend some time at a country-club "prison" --- and be allowed to keep most of what he stole. In modern America, Inc. that's the way it works. Or as Bob Dylan said,

"Steal a little and they'll throw you in jail,
"Steal a lot and they'll make you king."

[NicoleToday]

11:54 AM on 03/02/2011

When I waited over a year after I filed a SOX complaint with OSHA about a TBTF bank until I finally gave up because I realized they weren't going to do anything. You can read about it on my blog.

predatorsinourmidst.com

[BeerLover]

01:46 PM on 03/02/2011

No doubt you are correct. All he really has to do is buy up a bunch of real estate in Floriduh.... it'll never be taken away from him.

[Eagle in NYC]

10:54 AM on 03/02/2011

Rajat Gupta gave over $100,000 to various, exclusively Democrat politicians. How many of them will now return his ill-gotten funds?

[USNDC]

08:56 AM on 03/02/2011

Risky article for this audience.

Not one mention of Gupta's high profile with the DNC.

[blogisti]

08:51 AM on 03/02/2011

One indicted, four thousand to go. Shall I hold my breath? No, I guess not.

[BeerLover]

01:47 PM on 03/02/2011

No, please don't. You sound intelligent; we need you to live.

I would like everyone who voted republican in the last election to support their greed and masters, to do so though.

[orchids8]

08:31 AM on 03/02/2011

Oh, so that's the SEC's big plan, get them after they leave Goldman Suchs. Nibbling around the proverbial edge, why start with the tough stuff like creating AAA rated securities out of high risk junk then betting against it.

Message to SEC, throwing the public insider trading bones will not make us forget the FRAUD.