New Insider-Trading Allegation Against Gupta

Apr 17 2012 | 1:49pm ET

Prosecutors have filed a new insider-trading claim against former McKinsey & Co. chief Rajat Gupta.

The new allegation brings to five the number of confidential tips Gupta is accused of passing to Galleon Group founder Raj Rajaratnam. All dealt with Goldman Sachs and Procter & Gamble, on whose board Gupta sat.

The latest allegation is that Gupta told Rajaratnam of "P. & G.'s organic sales growth forecast for the October-to-December quarter prior to P. & G.'s public announcement on or about Dec. 11, 2008," prosecutors said in a letter made public Monday. The new claim is based on instant messages and e-mails reviewed only last week, prosecutors told U.S. District Judge Jed Rakoff, who in February warned he wouldn't allow further charges.

But prosecutors appear undeterred, writing, "the government… is waiting for outstanding requests for information from a number of third-parties," and in particular is eyeing Procter & Gamble's fourth-quarter 2007 earnings announcement.

Gupta is not accused of trading illegally himself. His lawyer has poured scorn on the case and promised a vigorous defense. He faces five counts of securities fraud and one of conspiracy; he faces decades in prison if convicted at his trial, which begins on May 21.

The "newly added charges—like the ones brought last year—are not based on any direct evidence, but rely on supposed circumstantial evidence."

Goldman CEO Lloyd Blankfein is expected to testify at Gupta's trial, which will also feature wiretapped phone calls involving Gupta. Some of those calls were heard at Rajaratnam's trial, which ended in the Galleon founder's conviction and sentencing to 11 years in prison.


In Depth

Q&A: Reg A+ Will Transform the Alternative Asset Landscape

Jul 7 2015 | 4:03pm ET

In addition to easing capital formation for small companies, Regulation A+ has enormous...

Lifestyle

Fiat Chrysler Files Paperwork For Ferrari IPO

Jul 23 2015 | 5:05pm ET

Italian sportscar maker Ferrari has taken a step closer to a stock market listing...

Guest Contributor

6 Essential Principles To Balance Your Investment Risk

Jun 26 2015 | 10:07am ET

In this article, financial expert Greg Silberman explores how to hedge a private...

 

Editor's Note