| Log In | Register Now
By Grant McCool
October 26, 2011 11:42 AM EDT
Rajat Gupta, a former director of Goldman Sachs Group Inc and Procter & Gamble, was arrested on Wednesday on insider trading charges, making him the most prominent executive to be accused in a broad U.S. crackdown on illegal leaks of corporate secrets.
Gupta, 62, surrendered to FBI agents on charges that he disclosed confidential information about Goldman and Procter & Gamble to his friend, former hedge fund manager Raj Rajaratnam.
Galleon Group founder Rajaratnam was sentenced to 11 years in prison this month for insider trading, an investigation that caught many of his associates on secretly recorded phone calls.
Gupta was global head of consultancy McKinsey & Co for nine years until he retired in 2007. He won a seat on the board of directors of powerful Wall Street bank Goldman in 2006. He was also a director at P&G and American Airlines Corp.
He was charged with one count of conspiracy and five counts of securities fraud. He also was charged in a civil insider trading case brought by the U.S. Securities and Exchange Commission.
Follow us
"Rajat Gupta was entrusted by some of the premier institutions of American business to sit inside their boardrooms, among their executives and directors, and receive their confidential information so that he could give advice and counsel for the benefit of their shareholders," Manhattan U.S. Attorney Preet Bharara said in a statement.
"As alleged, he broke that trust and instead 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," Bharara said.
A spokesman for Gupta's lawyer, Gary Naftalis, declined immediate comment on his client's arrest.
On Tuesday night, when a source briefed on the case said Gupta would be arrested, Naftalis said in a statement that his client did nothing wrong.
"Any allegation that Rajat Gupta engaged in any unlawful conduct is totally baseless," Naftalis said. "The facts demonstrate that Mr. Gupta is an innocent man and that he has always acted with honesty and integrity. 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 any quid pro quo."
An FBI spokesman said Gupta surrendered to agents at his home in Westport, Connecticut, and that he was driven to the New York FBI office, where he was placed under formal arrest at 8:15 a.m. EDT.
He is expected to appear in federal court later in the day, court officials said.
TWO-MONTH TRIAL
Rajaratnam, who was born in Sri Lanka and became a billionaire through his hedge fund business, was convicted in May of 14 insider-trading related charges, and his 11-year sentence is the longest recorded for insider trading. At the trial, prosecutors said that in 2008 Gupta, who was born in India, leaked information about Goldman Sachs that he learned from the powerful Wall Street bank's board meetings.
iOS 5.1.1 Untethered Jailbreak Released: How To Use Absinthe 2.0 On iPhone 4S, iPad 3, iPod Touch And More [VIDEO]
Are Record-Low Mortgage Rates Hurting The US Housing Market?
Memorial Day Sales 2012: 25 Best Deals, Discounts And Bargains Online And In Stores For MDW Holiday Weekend![How To Root Samsung Galaxy S3 [Tutorial]](http://img.ibtimes.com/www/thumb/mainpage/273544-7458-will-samsung-galaxy-s3-outshine-sony-xperia-p.jpg)
How To Root Samsung Galaxy S3 [Tutorial]
Facebook, ‘Titanic' Of IPOs, Could Poison Tech Company PipelineWe value your privacy. Your email address will not be shared.
