Mr. Gupta, the former head of global consulting firm McKinsey & Co., leaked details about the companies’ financial condition and an investment by Warren Buffett’s Berkshire Hathaway Inc. to former hedge-fund titan Raj Rajaratnam. The Galleon Group founder was sentenced earlier this month to serve 11 years in prison for insider trading.
Mr. Gupta, 62 years old, surrendered to the Federal Bureau of Investigation on Wednesday morning and later appeared in federal court in Manhattan wearing a dark suit and light-red tie. Mr. Gupta, of Westport, Conn., was charged with one count of conspiracy to commit securities fraud and five counts of securities fraud. He faces up to 20 years in prison on each fraud charge.
Bail was set at $10 million, to be secured by Mr. Gupta’s Connecticut home. He was also ordered to surrender his passport.
“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,” said Preet Bharara, the U.S. attorney in Manhattan. “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.”
The SEC also separately brought related civil insider-trading charges against Mr. Gupta and added additional civil allegations against Mr. Rajaratnam regarding alleged improper trades in P&G.
Mr. Gupta also allegedly leaked information about the corporate earnings of Procter & Gamble in January 2009, where he also served on the board, according to the indictment.
McKinsey hasn’t been accused of any wrongdoing in the insider-trading matter. McKinsey couldn’t immediately be reached for comment.
Neither Goldman nor P&G has been accused of any wrongdoing in the insider-trading matter. Goldman has declined to comment. A spokesman for P&G has declined to comment.
Such corruption on Wall Street coming out. I had no idea! Just think of the number of people who don’t get caught.