Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Wednesday, October 26, 2011

SEC & DOJ Charge Rajat Gupta with Passing Inside Information on Goldman & P&G to Rajaratnam

And the other shoe has dropped.  Both the DOJ and the SEC have brought insider trading charges against Rajat K. Gupta, a former director of Goldman Sachs and Procter & Gamble, who allegedly provided Raj Rajaratnam with confidential inside information about Goldman Sachs.  A federal grand jury charged Gupta with one count of conspiracy to commit securities fraud and five counts of securities fraud.  The SEC filed a civil complaint alleging an "extensive insider trading scheme" and  also filed new insider trading charges against Rajaratnam.  The allegations all relate to inside information involving both Goldman and P&G.

Gupta was named as an unindicted co-conspirator in the Rajaratnam case.  It is not clear how strong the government's case is, because, at least at the Rajaratnam trial, there were no tapes of phone conversations from Gupta, only phone calls between Rajaratnam and others that appear to refer to Gupta (i.e., hearsay).

The SEC previously brought an administrative proceeding against Gupta, which was dismissed because Judge Rakoff believed that the SEC's decision to bring an administrative proceeding against Gupta while bringing judicial proceedings against other Rajaratnam defendants was disciminatory.  The dismissal was without prejudice to bring a judicial proceeding.

NYTimes, Gupta Charged With Securities Fraud Related to Goldman Tips

SEC Press Release

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