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Ex-Goldman Sachs Director, Rajat Gupta, Accused of Providing Insider Trading Tips while "Doing the Lord's Work"

Updated on June 17, 2012
lloyd Blankfein
lloyd Blankfein
Rajat Gupta
Rajat Gupta | Source

Ex-Goldman Director Charged in Insider Trading Investigation

Rajat Gupta, ex-Goldman Sachs director and, until he resigned last week a director of Procter and Gamble was charged by the Securities and Exchange Commission with giving inside information to Raj Rajaratnam of Galleon hedge fund who is going to trial this week on criminal insider trading charges. Before joining Goldman, Gupta headed the consulting firm, McKinsey & Co. He is a native of Kolkata, India and a graduate of Harvard Business School.. Gupta is the second person from McKinsey to become enmeshed in insider trading violations involving information furnished to Rajaratnam at Galleon.

Gupta is charged by the S.E. C. with furnishing iinformation to Rajaratnam on Berkshire Hathaway's $5 billion investment in Goldman preferred shares and on Goldman's and Procter and Gamble's earnings. According to the S.E.C. charge Rajaratnam/Galleon bought 175,000 shares of Goldman minutes after a phone call from Gupta. Galleon netted a profit of $900,000 on the transaction.

Gupta's earnings from his Directors positions at Goldman and Procter and Gamble exceeded $2.5 million.

The charges against Gupta follow Goldman's payment last year of $550 million to settle an S.E.C. charge involving the sale of a mortgage investment, neither admitting nor denying guilt, of course.

Gupta's lawyer , Mr. Nathalis, said his client's "40-year record of ethical conduct, integrity and commitment to guarding his clients' confidences is beyond reproach," and that the S.E.C. charges are "baseless."

[Based on information in the NYTimes article linked below and other sources.]

Comment: Insider trading is much more prevalent and difficult to prevent or prosecute than anyone likes to admit. The small individual investor is usually left holding the bag, the last to get the good news going in and the bad news getting out. Trading individual stocks is a loser's game for ordinary folks. [See "Winning the Loser's Game" by by Charles Ellis. Ellis recommends no-load, low cost, tax efficient index mutual funds like the ones offered by Vanguard.]

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    • Ralph Deeds profile imageAUTHOR

      Ralph Deeds 

      6 years ago from Birmingham, Michigan

      M6--17-12NYTimes--Rajat Gupta Convicted of Insider Trading

      Rajat Gupta Convicted of Insider Trading - NYTimes.com

      Rajat K. Gupta, the retired head of the consulting firm McKinsey & Company and a former Goldman Sachs board member, is the most prominent executive convicted in the government's sweeping investigation into insider trading on Wall Street.

      Insider trading is rampant. The little guy doesn't have a chance!

    • Wizard Of Whimsy profile image

      Wizard Of Whimsy 

      6 years ago from The Sapphire City

    • Harvey Stelman profile image

      Harvey Stelman 

      7 years ago from Illinois

      Of course they won't, this is America. In other countries they would put up statues, and thank them for their donation. H

    • Ralph Deeds profile imageAUTHOR

      Ralph Deeds 

      7 years ago from Birmingham, Michigan

      Thanks, Harvey. Me too! But they won't.

    • Harvey Stelman profile image

      Harvey Stelman 

      7 years ago from Illinois

      If true, I hope they hang them by their b***s! H

    • Ralph Deeds profile imageAUTHOR

      Ralph Deeds 

      7 years ago from Birmingham, Michigan

      Very true. Thanks for your comment.

      The dog that didn't bark? Curious SEC Accusations in Insider Case?

      http://dealbook.nytimes.com/2011/03/07/curious-acc...

    • yenajeon profile image

      Yena Williams 

      7 years ago from California

      As per usual. It doesn't even shock me anymore. Rated up!

    • Ralph Deeds profile imageAUTHOR

      Ralph Deeds 

      7 years ago from Birmingham, Michigan

      Yep. We can agree on that.

    • breakfastpop profile image

      breakfastpop 

      7 years ago

      There is no end to the garbage on Wall Street still living the life at our expense. Up and awesome!

    • Ralph Deeds profile imageAUTHOR

      Ralph Deeds 

      7 years ago from Birmingham, Michigan

      Thanks!

    • Online Money 101 profile image

      Online Money 101 

      7 years ago

      Brutal!

    • Ralph Deeds profile imageAUTHOR

      Ralph Deeds 

      7 years ago from Birmingham, Michigan

      Goldman CEO May Testify in Galleon Insider Trading Trial

      Mr. Blankfein has agreed to testify for the government in the trial of Mr. Rajaratnam, a founder of the Galleon Group hedge fund, according to a person with direct knowledge of the case who spoke only on the condition of anonymity. Mr. Rajaratnam’s trial is scheduled to start on Tuesday in Federal District Court in Manhattan.

      http://dealbook.nytimes.com/2011/03/03/goldman-c-e...

    • Ralph Deeds profile imageAUTHOR

      Ralph Deeds 

      7 years ago from Birmingham, Michigan

      They're worse than ignorant. They're evil.

    • Janell Rhiannon profile image

      Janell Rhiannon 

      7 years ago from CA, USA

      ARRR! How can they be so ignorant? They KNEW exactly what they were doing...

    • Ralph Deeds profile imageAUTHOR

      Ralph Deeds 

      7 years ago from Birmingham, Michigan

      Thanks for your comment. I'll check out your hub.

    • f_hruz profile image

      f_hruz 

      7 years ago from Toronto, Ontario, Canada

      Thanks for the info ...

      What a great update to my hub "Had enough by now?"

      https://hubpages.com/politics/Hade-enough-by-now

      PS: Buying the high-income Mutual Fund Companies is much better than buying their products. Financial products, the housing market and the whole banking industry is quite a bit more stable up here in Canada than in the US!

    • Earth Angel profile image

      Earth Angel 

      7 years ago

      Ahhhhhhh business as usual on Wall Street! Thanks for the great information Ralph! Like Anderson Cooper you are just 'keepin' 'em honest!' Blessings always, EarthAngel!

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