Rajat Gupta convicted of insider trading

Jun 16 2012, 14:50 IST
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SummaryGupta is the retired head of McKinsey & Company and a former Goldman Sachs board member.

Rajat K Gupta, the retired head of the consulting firm McKinsey & Company and a former Goldman Sachs board member, was found guilty on Friday of conspiracy and securities fraud. He is the most prominent business executive convicted in a wave of prosecutions that followed the government’s sweeping investigation into insider trading on Wall Street.

After a month-long trial in Federal District Court in Manhattan, a jury took only two days to deliberate before reaching a verdict. It found Gupta guilty of leaking confidential information about Goldman to his former friend and business associate, the fallen hedge fund titan Raj Rajaratnam, on three different occasions in 2008. He was also convicted of conspiring in an insider trading scheme with Rajaratnam.

Gupta was found not guilty of two instances of tipping Rajaratnam, including an allegation that he divulged secret news about Procter & Gamble, where he also served on the board.

“Having fallen from respected insider to convicted inside trader, Gupta has now exchanged the lofty board room for the prospect of a lowly jail cell,” Preet Bharara, the United States attorney in Manhattan said in a statement.

“Almost two years ago, we said that insider trading is rampant, and today’s conviction puts that claim into stark relief,” he said.

After the verdict was read in the courtroom, Gupta, 63, remained stoic, his face expressionless. Just behind him, his wife, Anita, buried her head in her hands, leaning against a bench. His four daughters, who had squeezed into the front row of the spectators’ gallery each day during the trial, loudly sobbed and consoled one another. Several jurors were crying as they left the courtroom.

After the verdict was read in the courtroom, Gupta, 63, remained stoic, his face expressionless. Just behind him, his wife, Anita, buried her head in her hands, leaning against a bench. His four daughters, who had squeezed into the front row of the spectators’ gallery each day during the trial, loudly sobbed and consoled one another. Several jurors were crying as they left the courtroom.

Gary P Naftalis, a lawyer for Gupta, said, “We believe the facts of this demonstrate that Gupta is innocent and we continue to believe he is innocent of all the charges. This is only round one of this matter.”

Jed S Rakoff, the judge in the case, said he was inclined to set Gupta free on bail until his sentencing on October 18.

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