New York – A former board member of Goldman Sachs and Procter & Gamble surrendered Wednesday to face a six-count securities fraud indictment that makes him the latest defendant in the biggest insider trading case in history.
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The charges against Rajat Gupta were unsealed in U.S. District Court in Manhattan, where the indictment accused him of cheating the markets with Raj Rajaratnam, the convicted hedge fund founder who was the probe’s prime target.
Gupta, 62, of Westport, Conn., was awaiting an arraignment on one count of conspiracy to commit securities fraud and five counts of securities fraud.
The charges carry a potential penalty of 105 years in prison.
The Securities and Exchange Commissioner originally brought civil fraud charges against Gupta in March. The SEC alleged that, at the height of the financial crisis, he passed along privileged financial information that helped enrich Rajaratnam, a former billionaire hedge fund manager who was the prime target of the criminal probe.
Gupta’s lawyer responded by accusing the SEC of launching a “flawed case premised in large part on unreliable evidence being used in an attempt to bring down a man of sterling reputation and remarkable achievements without the procedural safeguards historically accorded to all persons similarly charged.”
In a release, U.S. Attorney Preet Bharara said Gupta broke the trust of some of the nation’s top public companies and “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.”
Alluding to the wide scope of the prosecution, he added: “Today we allege that the corruption we have seen in the trading cubicles, investment firms, law firms, expert consulting firms, medical labs, and corporate suites also insinuated itself into the boardrooms of elite companies.”
FBI Assistant Director-in-Charge Janice Fedarcyk said the arrest was the latest to occur in an initiative launched by the FBI in 2007 against hedge fund cheats.
“The conduct alleged is not an inadvertent slip of the tongue by Mr. Gupta,” she said. “His eagerness to pass along inside information to Rajaratnam is nowhere more starkly evident than in the two instances where a total of 39 seconds elapsed between his learning of crucial Goldman Sachs information and lavishing it on his good friend.”
The indictment said Gupta shared confidential information about both Goldman Sachs and Procter & Gamble from 2008 through January 2009, knowing that Rajaratnam would use the secrets to buy and sell stock ahead of public announcements.
The Securities and Exchange Commission also brought civil insider trading charges against Gupta Wednesday.
The SEC said Gupta, the former McKinsey & Co. global head, illegally tipped Rajaratnam, who has been sentenced to 11 years in prison after he was convicted at trial.
If he killed someone and is convicted of ‘manslaughter’ he faces approximately 15 to 20 years but for securities fraud he faces 105 years, makes sense to someone, I guess.
These are the thieves who cried poverty when their investments took a down turn. Even with insider information (which we all know they are ALWAYS getting), they still couldn’t keep it together because they stretched too thin thanks to the deregulation they bought through “campaign contributions”.
They convinced our corrupt former-President and corrupt Congress to give them billions of dollars of OUR money to pay THEMSELVES…. not the poor investors they fleeced, but to pay their million dollar BONUSES.
These bottom-feeders will finally get what’s coming to them. One by one they will go down for their dirty dealing.
I can only hope that this slime cuts a deal and turns in the filthy corrupt politicians in his pocket. Let’s face it, we will never be rid of the filth until we arrest the politicians who make it all possible and revoke that ridiculous decision that says corporations are “people”. The day I can draw blood from a “corporation”, I’ll be willing to give it the same rights as a “person”.
Anyway, they can arrest all the Wall St. guys they want, but until our two corrupt parties are flushed out, we’ll never end the corruption that steals money from the rest of us.
Let’s see how long he goes to jail. Want to take bets now
it seems the lax regulations during the bush era led many to try to get away with whatever to get rich, whether insider trading, or even lax safety concerns in mines just to make a few extra dollars
It’s about time another “bankster” did a perp walk!
There should be many more than him doing time right now…
Follow the money and see to which certain current White House it leads to. (to help the socialist get elected)
Oh good, another case who will probably take his plea deal, make restitution, get a year in jail and give us someone else to hold up as an example of the injustice against SMR.
To the Wall St protesters: Was this Gupta guy also a jew? Bloody anti-semites!!
He and Raj. Thank goodness they weren’t yidden.
He’s Indian not Jewish so he’ll get no time & a $5m fine.
Happy birthday, SMR! May the Aibishter grant you your Yeshua mamash now.