The US Securities and Exchange Commission (SEC) has filed charges against Rajat Gupta, a former director of American bank Goldman Sachs and Indian School of Business (ISB) chairman?for allegedly providing illegal insider information. The SEC said Gupta has passed illegal tips about Goldman Sachs to hedge fund billionaire Raj Rajaratnam, the founder of the Galleon Group who is scheduled to be tried next week for insider trading charges.
He has been slapped with insider trading charges for allegedly leaking secret details to Galleon Group hedge fund manager Raj Rajaratnam about Warren Buffett?s plan to invest $5 billion in the company. However in its statement on Wednesday ISB said that the allegations are totally baseless and he would continue to be the chairman on the ISB executive board.
The 62-year-old Gupta is one of the highest-ranking executives implicated in the government?s wide-ranging insider trading probe which has resulted in criminal or civil charges against dozens of individuals. A mechanical engineer from IIT Delhi and MBA from Harvard, Gupta was the first managing director of McKinsey & Company, who was born out of the US.
In its response to FE, ISB spokesperson said, ?We note that the US Securities and Exchange Commission has initiated administrative and civil proceedings against our Chairman, Rajat Gupta. We also note the statement of the counsel for Rajat Gupta, which asserts that the allegations are totally baseless. The ISB community is confident that Rajat Gupta will be vindicated. He continues to be the Chairman of the ISB Executive Board.?? Now, in its 10th year, the ISB has built its reputation as a world-class business school by consistently focusing on its mission of delivering the highest quality of programmes and creating cutting-edge research output, the spokesperson emphasised.
The SEC alleges that Gupta, who retired from the board in May 2010, provided Rajaratnam with information about the Wall Street bank?s financial results for the second and fourth quarters of 2008 before they were made public. The charges against Gupta is part of the widening probe on insider trading initiated by the SEC against lawyers, consultants, accountants, corporate insiders and hedge fund managers.
Gupta was an investor and director of Galleon?s GB Voyager Multi-Strategy Fund SPC, which invested in a number of Galleon hedge funds, some tied to the insider trading scheme, and had other business potentially lucrative business interests with Rajaratnam, according to the SEC charges. He is also said to have improperly shared information about the December 2008 quarter at Procter & Gamble, where he was and remains a director, which generated $570,000 in illicit gains.
?Gupta was honoured with the highest trust of leading public companies, and he betrayed that trust by disclosing their most sensitive and valuable secrets,? SEC enforcement chief Robert Khuzami said in a statement. As per reports, Gupta?s lawyer, Gary Naftalis, said the SEC charges were baseless. Naftalis said Gupta did nothing wrong and stands by his 40-year record of ethical conduct, integrity and commitment to keeping clients? confidence.