M & A Law Prof Blog

Editor: Brian JM Quinn
Boston College Law School

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Thursday, March 3, 2011

23 Seconds

... really?  That can't be true.  Maybe it is.  I don't know, but it's pretty ridiculous.  From the SEC's order against Rajat Gupta:

Gupta dialed into the October 23, 2008, Board meeting around the time it was scheduled to start and remained on the call until 4:49 p.m.  Just 23 seconds after disconnecting from the call, Gupta called Rajaratnam.  The call lasted approximately 13 minutes.  The following morning, just as the financial markets opened at 9:30 a.m., Rajaratnam caused the Galleon Tech funds to begin selling their holdings of Goldman Sachs stock. The funds finished selling off their holdings — which had consisted of over 120,000 shares — that same day at prices ranging from $97.74 to $102.17 per share.  The same day (October 24, 2008), in discussing trading and market information with another participant in the trading scheme, Rajaratnam explained that Wall Street expects Goldman Sachs to earn $2.50 per share but that Rajaratnam had heard the prior day from a member of the Goldman Sachs Board that the company was actually going to lose $2 per share. As a result of Rajaratnam’s trades based on the material nonpublic information that Gupta provided, the Galleon Tech funds avoided losses of over $3 million. 

This is a guy who was the former head of McKinsey, sat on the boards of Goldman and P&G and apparently, still feels the need to show how important he is buy sharing inside information with a hedge fund trader. 

-bjmq

http://lawprofessors.typepad.com/mergers/2011/03/23-seconds.html

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