Rajat Gupta News: Ex-Goldman Sachs Director Surrenders to FBI for Fraud
Former Goldman Sachs director Rajat Gupta has been taken into custody after being accused of providing illegal insider information to hedge fund manager Raj Rajaratnam.
Gupta was charged for civil fraud by the U.S. Securities and Exchange Commissioner in March. He is accused of giving secret information about Goldman Sachs to Rajaratnam, who was sentenced to 11 years in prison earlier this month.
Gupta is reported to have surrendered to the FBI this morning before being charged by a federal grand jury in Manhattan. He is allegedly charged with one count of conspiracy to commit securities fraud and five counts of securities fraud.
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“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,” said U.S. attorney Preet Bhararain a statement, reported by NY Times.
Her statement continued: “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, who reaped enormous profits from Mr. Gupta’s breach of duty.”
A recorded phone call between Gupta and Rajaratnam was played to the jury during Rajaratnam’s trial. It showed that Gupta called Rajaratnam 23 seconds after a private Goldman Sachs board member meeting, in which he was told that the banking firm made a quarterly loss. Rajaratnam then sold all of his Goldman Sachs stock, which saved him millions of dollars.
"Any allegation that Rajat Gupta engaged in any unlawful conduct is totally baseless,” Gupta’s lawyer Gary Naftalis told Reuters. “The facts demonstrate that Mr Gupta is an innocent man and that he has always acted with honesty and integrity. He 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."
Gupta joined the board of Goldman Sachs in 2006. He also served on the board of Procter & Gamble, and the parent company for American Airlines.
