Rajat Gupta’s insider trading trial starts today
21 May 2012
Rajat K Gupta, the high profile former head of McKinsey & Co and board member of Goldman Sachs Group Inc and Procter & Gamble, goes on trial in New York today on charges of insider trading.
Till a few years ago, Gupta was a confidante of corporate chieftains and major philanthropists around the globe. Now, he is accused of leaking stock and boardroom secrets to Raj Rajaratnam, the jailed founder of the Galleon Group hedge fund.
Last year a jury convicted Rajaratnam of orchestrating an insider trading conspiracy that reaped at least $63 million in illegal gains.
He is serving an 11-year prison term, the longest-ever sentence for insider trading, at a federal prison in Massachusetts.
But while prosecutors have called Gupta the "illegal eyes and ears" for Rajaratnam, their case is not as watertight as it was against Rajaratnam. At his trial, jurors spent weeks listening to the Galleon Group founder discussing stock trades on calls secretly recorded by the FBI. With Gupta, prosecutors have no direct conversations on tape related to the trades central to their case.
One of the government's core allegations is that Gupta tipped Rajaratnam to Berkshire Hathaway Inc's $5 billion investment in Goldman during the 2008 financial crisis and Goldman's surprise fourth-quarter loss that year.
