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Former Goldman Sachs director charged for insider trading
The US Securities and Exchange Commission (SEC) has this week announced insider trading charges against a former Goldman Sachs and Procter & Gamble (P&G) board member, Rajat…
Lawyers Weekly
The US Securities and Exchange Commission (SEC) has this week announced insider trading charges against a former Goldman Sachs and Procter & Gamble (P&G) board member, Rajat Gupta.
The SEC's division of enforcement has alleged that Gupta, a friend and business associate of Rajaratnam, provided him with confidential information gleamed from his duties on the Goldman and P&G boards.
It's alleged that Rajaratnam then used the information to trade on behalf of some of Galleon's hedge funds or passed that information on to others at Galleon who then traded on it ahead of public announcements by the firms.
According to the SEC, the insider trading by Rajaratnam and others has generated more than $18 billion in illicit profits and loss avoidance. At the time, Gupta was a direct or indirect investor in at least some of the Galleon hedge funds and had other business interests with Rajaratnam.
"Gupta was honoured with the highest trust of leading public companies and he betrayed that trust by disclosing their most sensitive and valuable secrets," said the director of SEC's division of enforcement, Robert Khuzami.
"Directors who violate the sanctity of board room confidences for private gain will be held to account for their illegal actions."
Gupta served as a Goldman Sachs board member from November 2006 to May 2010 and served on the board of P&G from 2007 until just this week, when he voluntarily stepped down on 1 March.
According to a P&G statement, Gupta has denied the SEC's accusations but stepped down in the interests of the company.
The SEC's charges against Gupta are part of an ongoing widespread insider-trading investigation, for which the SEC has already charged Rajaratnam and others.
