U.S. market regulator said former Goldman Sachs Group Inc and Procter & Gamble Co board member Rajat Gupta tipped Galleon hedge fund founder Raj Rajaratnam in phone calls about confidential company information. Gupta's lawyer said the allegations are baseless.
Rajaratnam's criminal trial is scheduled to start on March 8 in Manhattan federal court, part of the biggest U.S. probe of insider trading at hedge funds on record. Rajaratnam was also charged by the U.S. Securities and Exchange Commission when he was arrested in October 2009.
According to the SEC:
* Gupta tipped Rajaratnam by telephone with confidential information about Berkshire Hathaway Inc's $5 billion investment in Goldman before it was publicly announced on September 23, 2008. At the time, markets were in turmoil following the Sept. 15 collapse of Lehman Brothers Holdings.
* Gupta tipped Rajaratnam about Goldman's financial results for both the second and fourth quarters of 2008. The fourth quarter loss of $2.1 billion was Goldman's first and only quarterly loss as a publicly-traded company.
* Trades by Rajaratnam on the Goldman information generated more than $18 million of improper gains for Galleon, said the U.S. Securities and Exchange Commission administrative proceeding, the equivalent of a complaint.
* Gupta served on Goldman's board from November 2006 through May 2010. He had served on Proctor & Gamble's board since 2007. Gupta resigned on March 1, 2011.
* Rajaratnam told unidentified co-conspirators that he obtained the secret information about Goldman and Proctor & Gamble from a source on the company's board.
* The SEC document provided details of telephone records and calendar entries for various days in September and October 2008 for communications between Gupta and Rajaratnam about Goldman.
* In one example, it said Gupta dialed into the October 23, 2008, Goldman Sachs board meeting around the time it was scheduled to start and remained on the call until 4:49 p.m.
Just 23 seconds after disconnecting from the call, Gupta called Rajaratnam. The call lasted approximately 13 minutes.
The following morning, just as the financial markets opened at 9:30 a.m., Rajaratnam caused the Galleon Tech funds to begin selling their holdings of Goldman Sachs stock.
* The SEC said Rajaratnam told unidentified co-conspirators that he obtained the secret information about Goldman and Proctor & Gamble from a source on the company's board.
* Gupta tipped Rajaratnam by telephone in Jan. 29, 2009 about Procter & Gamble's financial results for the quarter ending December 2008, the SEC said. Rajaratnam told others at Galleon before the results came out on Jan. 30.
They traded for the hedge fund, earning illicit profits of more than $570,000.