More in the massive insider trading case of Galleon Group’s Raj Rajaratnam. Rajat K. Gupta, McKinsey executive and formerly on the board of Goldman Sachs, is expected to turn himself in to the FBI today according to a report.
Galleon Group’s Raj Rajaratnam recently got sentenced to 11 years in prison. The judge threw the book at him for abusing his position for financial gain, in a case which involved plenty of well known names in the tech industry, including Nvidia, IBM and Intel. The defence at the time said all of the information was in the public domain.
However, according to the Wall Street Journal, Gupta’s lawyer, Gary Naftalis, says he’s an innocent man. In a statement, he said Gupta “always acted with honesty and integrity.” Gupta plans to fight all charges, and according to the lawyer, 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 anyquid pro quo.”
The prosecution alleges that Gupta whispered trade secrets in Rajaratnam’s ear – including Goldman Sach’s first ever public quarterly loss. It is also alleged that, while on the Goldman Sachs board, he told Rajaratnam about Warren Buffet’s Berkshire Hathaway $5 billion investment.
Raj Rajaratnam’s jury heard a recorded conversation from 2008, where the Galleon founder told a Singapore colleague that he had been talking to someone on the board of Sachs. “I heard yesterday from somebody who’s on the board of Goldman Sachs that they are going to lose $2 per share. The Street has them making $2.50.”
The WSJ says Gupta was, however, heard on a tape telling Rajaratnam that Goldman was planning on buying a commercial bank.
However, a chink in the prosecution’s armour is that Gupta isn’t thought to have taken any money for allegedly providing Rajaratnam with trade secrets. It’s expected that the prosecution will argue insider trading doesn’t require the handing over of money, and the relationship between the two is evidence of a corrupt and closed corporate culture.
Rajat Gupta would become the highest ranking corporate executive implicated in the case.