Rajat Gupta, a former Goldman Sachs director and top partner at McKinsey & Co., surrendered to federal authorities today in relation to an insider trading case.
In March, the SEC brought civil charges against Gupta, who the commission alleges leaked inside information to convicted insider trader Raj Rajaratnam, former hedge fund manager and Galleon Group founder. At the time, Gupta’s attorney said the SEC had launched a "flawed case premised in large part on unreliable evidence."
But during Rajaratnam’s recent trial, prosecutors revealed that Gupta contributed to the hedge fund manager’s acts of insider trading. On one occasion, 23 seconds after attending a board meeting in which members were informed Goldman was facing its first quarterly loss since 1999, Gupta called Rajaratnam. The next day, Rajaratnam sold all of his Goldman stock, saving millions of dollars. Gupta also informed Rajaratnam of a $5 billion investment Berkshire Hathaway was about to make in Goldman. Rajaratnam made nearly $1 million with that information. Rajaratnam was convicted of insider trading and sentenced to 11 years in prison earlier this month.
Gupta is currently in federal custody, however, charges against him have not yet been disclosed.