Former Goldman Sachs executive charged with insider trading

3 March 2011

An ex-Goldman Sachs executive has been charged with insider trading in relation to the ongoing case against Galleon Group founder Raj Rajaratnam.

Rajat K Gupta, who also worked for Procter&Gamble, is accused of using confidential information from board meetings to either inform his trades or the trades of confidants ahead of public announcements.

The Securities and Exchange Commission (SEC) alleged that the former banker provided Mr Rajaratnam with advance details of Berkshire Hathaway’s $5 billion investment in Goldman Sachs as well as its public equity offering in September 2008.

Robert Khuzami, director of the SEC’s division of enforcement, said: “Gupta was honoured with the highest trust of leading public companies, and he betrayed that trust by disclosing their most sensitive and valuable secrets.

“Directors who violate the sanctity of board room confidences for private gain will be held to account for their illegal actions.”

Gupta is also accused of divulging information surrounding financial results for Goldman Sachs for the second quarter of 2008.

The SEC claimed that insider trading carried out by Mr Rajaratnam and his accomplices generated more than $18 million.

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