Thursday, 26 May 2016
Last updated 7 hours ago
Apr 23 2010 | 1:10pm ET
Galleon Group founder Raj Rajaratnam was tipped off about Berkshire Hathaway’s $5 billion investment in Goldman Sachs in 2008 by a member of the investment bank’s board of directors.
Rajat Gupta, the former head of consulting firm McKinsey & Co. and Goldman director since 2006, passed confidential information about the deal to Rajaratnam prior to its public announcement in September 2008, The Wall Street Journal reports. Gupta, a longtime friend and business associate of Rajaratnam’s, was notified by letter that prosecutors had intercepted phone conversations between him and the Galleon chief, although it is unclear whether they have a tape of him giving Rajaratnam that Berkshire tip.
Rajaratnam is set to go to trial for his role in an alleged $50 million insider-trading circle in October. Eleven of the 21 people charged in the case have pleaded guilty, including a former McKinsey executive. Gupta has not been charged with, and denies, any wrongdoing.
Gupta has previously been identified as an alleged Rajaratnam tipster. In a court filing last week, prosecutors said Rajaratnam sought information about the Berkshire deal but did not identify who he received it from. The Journal says Gupta, who is stepping down from the Goldman board next month, was the source.
Gupta did not participate in Monday’s Goldman board meeting. He has spoken to the firm’s lawyers, and reportedly denied any wrongdoing.