McKinsey’s Rajat Gupta being probed in Galleon chief Rajratnam’s trial
07 Mar 2011
A former Goldman Sachs board member Rajat Gupta conspired with Raj Rajaratnam, co-founder of the Galleon Group LLC, feeding him inside tips, assistant US attorney Jonathan Streeter told a federal judge in Manhattan on Friday.
The testimony of Raj Rajaratnam, the centre of the largest US crackdown on hedge-fund insider trading in US history, will begin tomorrow at the federal court in Manhattan.
In April 2010, The Wall Street Journal reported that Gupta had informed a manager of beleaguered hedge fund Galleon Group about Warren Buffett's $5-billion investment in the bank before the deal was made public (See: Rajratnam had prior information on Buffet-Goldman deal: report).
Raj Rajaratnam, a one-time billionaire hedge fund founder, was informed by the then-Goldman board member Rajat Gupta to give him tips, Streeter said. Rajaratnam then traded hundreds of thousands of shares of Goldman Sachs stock.
The Securities and Exchange Commission filed civil charges against Gupta last week, accusing him of tipping Rajaratnam seven minutes before the stock markets closed on 23 September 2008, that the Goldman Sachs board had approved an offer from Warren Buffett's Berkshire Hathaway to invest $5 billion in the banking giant.
The SEC said Rajaratnam directed his hedge fund, the Galleon Group, to buy 175,000 shares of Goldman stock within a minute of receiving the tip, enabling him to earn nearly $1 million in profit.
