Rajat Gupta, former director at Goldman Sachs and Procter & Gamble has been convicted on counts of securities fraud and conspiracy for sharing tips about both companies with the Galleon Group hedge fund, which greatly benefited from his inside knowledge.
According to the Wall Street Journal, Gupta could face a total of 25 years in prison for his insider trading. Galleon Group’s founder Raj Rajaratnam was imprisoned last year, sentenced to 11 years for insider trading in connection with the same case.
Gupta was one of the most prominent figures in corporate America and is the foremost executive to have ever been prosecuted successfully for insider trading in the U.S. From the WSJ:
Mr. Gupta, 63 years old, was elected three times as managing director of McKinsey & Co., a consulting firm for many Fortune 500 companies, retiring from the firm in 2007. After he was charged by the Securities and Exchange Commission in a civil administrative proceeding in March 2011, he resigned from the boards of P&G and AMR Corp., the parent of American Airlines. He already had left Goldman by then.
The Economist has also been following the trial of Mr. Gupta, who is an American but was born in Kolkata, India:
The courtroom was full throughout the trial; one side filled with the press, including a contingent from Mr Gupta’s home country, India. Due to the lack of space, two courtroom artists sat across the aisle, next to Mr Gupta’s wife and four adult daughters. Behind them sat personal friends, many Indian, along with various attorneys (some on the prowl for follow-up litigation). They were surrounded by the FBI agents and members of the prosecutor’s office who periodically visited the courtroom. It has been an extraordinarily high-profile case, failing to draw only one possible group: any of the notable corporate or public officials who had been Mr Gupta’s colleagues.