Rajat Gupta convicted on insider trading charges
The former Goldman Sachs director was convicted on criminal charges of providing insider information to his friend Raj Rajaratnam.
Rajat Gupta, one of the most successful Indian Americans on the Wall Street, was today found guilty of passing confidential market information to Galleon hedge fund founder Raj Rajaratnam, in one of America's biggest insider trading cases.
A US court held the 63-year-old former Goldman Sachs director guilty of providing insider information to his former friend Rajaratnam, who was sentenced last year to 11 years in prison for insider trading.
Gupta was found guilty by a federal court in Manhattan here on four counts, out of six charges.
The court will pronounce the sentence on October 18. Prosecutors had accused Gupta, the poster boy of Indians in Corporate America, of providing market-moving information to hedge fund manager Rajaratnam, while serving on the board of Goldman Sachs and heading McKinsey & Co.
The high-profile trial began on May 21 and lasted for three weeks.
Securities fraud carries a maximum prison sentence of 20 years while conspiracy carries a five-year maximum prison sentence. Gupta will remain free on bail until his sentencing.
Gupta was convicted on three counts of securities fraud and one count of conspiracy for passing along confidential boardroom information about Goldman and Proctor & Gamble companies to the hedge fund that earned millions of dollars trading on his tips. He was acquitted of two counts of securities fraud. He was found guilty for information about the USD 5 billion investment by Warren Buffett's Berkshire Hathaway Inc, and of proving information to Rajaratnam on October 24, 2008 about Goldman stock.
There were five security fraud charges and once conspiracy charge against him. Out of the five security fraud charges, he was found guilty on three and found guilty on the lone conspiracy charge.
His wife and four daughters broke down as the jury read out the sentence but Gupta was expressionless.
As the jury left the court room, Gupta hugged his family members. The verdict is being regarded as a major victory for US prosecutors as the government drives to stop leaking of corporate secrets to Wall Street.
"Rajat Gupta once stood at the apex of the international business community. Today, he stands convicted of securities fraud. He achieved remarkable success and stature, but he threw it all away," said Indian-origin chief Manhattan prosecutor Preet Bharara said in a statement.
"Having fallen from respected insider to convicted inside trader, Mr Gupta has now exchanged the lofty board room for the prospect of a lowly jail cell," he said.
Besides his tenure at Goldman Sachs and McKinsey, which he ran from 1994 to 2003, the Kolkata-born Gupta served on the boards of the Rockefeller Foundation and the Bill & Melinda Gates Foundation. He is also a co-founder of the Indian School of Business in Hyderabad.