Ex-McKinsey Chief Charged By SEC With Tipping Rajaratnam

Mar 1 2011 | 3:02pm ET

Rajat Gupta, the former head of consulting giant McKinsey & Co. and a former Goldman Sachs board member, passed confidential information on to Galleon Group founder Raj Rajaratnam, the Securities and Exchange Commission alleged today.

The regulator filed a civil administrative proceeding against Gupta alleging that he passed tips about Goldman and Procter & Gamble, on whose board he also sat until today, to Rajaratnam. The suit comes just a week before Rajaratnam is set to face trial on insider-trading charges.

Gupta had previously been identified as a Rajaratnam tipster, but had not been accused of any wrongdoing. He has still not been charged with any criminal wrongdoing, and his lawyer, Gary Naftalis, dismissed the SEC charges as "totally baseless."

Gupta and Rajaratnam have been friends and business partners for decades. According to the SEC and prosecutors, Gupta gave Rajaratnam advanced notice of Berkshire Hathaway's 2008 investment of $5 billion in Goldman, one of more than a dozen stocks in which Rajaratnam is alleged to have traded illegally.

Galleon earned almost $1 million on the Berkshire tip, the SEC said. Two other tips that year, about Goldman's quarterly performance, helped Galleon earn more than $13.6 million and avoid more than $3 million in losses, the complaint alleges.

Gupta's tip about poor performance at P&G in the fourth quarter of 2008 allegedly earned Galleon another $570,000.

"Gupta was honored 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. "Directors who violate the sanctity of board room confidences for private gain will be held to account for their illegal actions."


In Depth

Q&A: Executive Recruiter Talks Hedge Fund Closures, Hiring Trends

Dec 19 2014 | 6:58am ET

This year, hedge funds have been closing at a rate not seen since the financial...

Lifestyle

Cooper-Hohn Won't Contest Divorce Settlement

Dec 18 2014 | 9:51am ET

The ex-wife of hedge fund billionaire Christopher Hohn will not contest a divorce...

Guest Contributor

Alternative Investment Funds Face A Communications Imperative

Dec 19 2014 | 6:10am ET

A handful of the top alternative investment firms on both sides of the Atlantic...

 

Sponsored Content

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

December 2014 Cover

Futures 2014 person of the year

Jeff Sprecher was simply looking for a platform to trade energies when launching ICE 14 years ago but it has grown to reach the pinnacle of both the listed futures and equities world.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.