Rajat Gupta, one of the most successful Indian Americans on Wall Street, was found guilty on Friday of passing confidential market information to Galleon hedge fund founder Raj Rajaratnam in one of America's biggest insider trading cases.
A Manhattan court held the 63-year-old former Goldman Sachs director guilty of providing insider information to his former friend, Mr. Rajaratnam, who was sentenced last year to 11 years in prison for insider trading.
Mr. Gupta was found guilty on four counts out of six charges.
The court will pronounce the sentence on October 18.
Prosecutors had accused Mr. Gupta of providing market-moving information to Mr. Rajaratnam while serving on the board of Goldman Sachs and heading McKinsey&Co.
The high-profile trial began on May 21 this year and lasted three weeks.
Securities fraud carries a maximum prison sentence of 20 years, while conspiracy carries a five-year maximum prison sentence.
Mr. Gupta will remain free on bail until his sentencing.
Mr. Gupta was convicted on three counts of securities fraud and one count of conspiracy for passing along confidential boardroom information about Goldman and Proctor & Gamble companies to the hedge fund that earned millions of dollars trading on his tips.
He was acquitted of two counts of securities fraud.
He was found guilty for providing information about the $5-billion investment by Warren Buffett's Berkshire Hathaway Inc., and about Goldman stock on October 24, 2008.
His wife and four daughters broke down as the jury read out the sentence, but Mr. Gupta was expressionless.
The verdict is being regarded as a major victory for U.S. prosecutors as the government seeks to stop leaking of corporate secrets to Wall Street.
“Mr. Rajat Gupta once stood at the apex of the international business community. Today, he stands convicted of securities fraud. He achieved remarkable success and stature, but he threw it all away,” said Indian-origin chief Manhattan prosecutor Preet Bharara said in a statement.
“Having fallen from respected insider to convicted inside trader, Mr Gupta has now exchanged the lofty boardroom for the prospect of a lowly jail cell,” he said.
Besides his tenure at Goldman Sachs and McKinsey, which he ran from 1994 to 2003, the Kolkata-born Gupta served on the boards of the Rockefeller Foundation and the Bill & Melinda Gates Foundation.
He is a co-founder of the Indian School of Business in Hyderabad.
Defence lawyer Gary Naftalis said he was disappointed that the jury convicted Mr. Gupta of four charges. “We continue to believe that he acted with integrity and honesty and never pocketed a dishonest dime.”
Keywords: Rajat Gupta conviction, insider trading, securities fraud, Goldman Sachs, Galleon hedge fund, Raj Rajaratnam
India should take lessons from US on what democracy should actually achieve. Trial for people like Raj Rajatnam and Rajat Gupta took less than 12 months to complete - one way or the other - Guilty or Not Guilty. Rajat has been convicted based on cirumstantial evidence. This is what reasonable law has to do. US can now move on hoping that the lessons are learnt.
What are the lessons in India. Swindle in huge numbers. Get out on bail because you know the cases will not be closed atleast for 10 - 15 years. 2 or 3 governments will change. Criminals will continue to outside making public discourses on integrity, win elections in the meanwhile. Any growing up kid in India will learn these kinds of lessons. High court and Supreme Court judges in India? Are you watching US? Please wake up. Let us crete a revolution in India in setting record times trial completion. To me this can be huge factor in moving India in the right direction.
It is my firm belief that to make it that high in the corporate world is not easy without compromising on ethics. Many at that level live in a gray area bordered by thin lines. A few are caught in the act. Rajat Gupta is one who has brought shame to India and to the Indian American community. I hope there is a learning in this episode from which all aspiring corporate honchos take a leaf.
Shame on Indian Justice system. You have crook lawyers and judges who
will never allow to see the big crooks like Ambanis,Raja and so many
crook politicians who are at the back of these business men to see that
they remain outside and continue cheating the victims of corrupt system
called democracy.
I remember when we used to hold Rajat Gupta in awe since he was the first Indian to become a head of a famous global brand like McKinsey consulting. He was inspiration for a lot of Indians in the US that anything is possible with talent and hard work. However I guess over the years as he accumulated wealth and influence Mr Gupta forgot his humble roots and early struggles as an orphan, and gave in to greed and hubris. I wish it was different. A sad and ignominious end to an illustrious and proud career. I wish Mr Gupta and his family best of luck and hope they would overcome this misfortune brought on by Mr Gupta himself.
I don't understand what drives those who are already financially well-off to perpetrate illegality that might cost them hard-earned money and prestige?
This is the power of a developed economy. Super rich guys like Rajaratnam and Rajat Gupta are now destined to die in Jail. Can you imagine the same treatment for Ambani, Raja, Kalmadi, Chiddu etc. It can never happen in India. Now do you know why Ravi Rishi is staying on in India even though he is a British citizen.
forget Rajat Gupta....
take a deep breath.... and think about the share market that stands on just gas....that can be manipulated by few people, bringing fortune to few and misery to the rest....what kind of a system man has created...and we all invest in mutual funds and shares expecting some kind of income in the sunset years of our life...
We are caught in this ... there seems noway out...Do you want to survive the coming future....grow your food or train yourself to beg.....
Mr Rajat Gupta may or may not have actually committed any criminal act. However, the prosecutor Preet Bharara should not have said that "Mr Gupta has now exchanged the lofty boardroom for the prospect of a lowly jail cell". Such language does not behove of a Public Prosecutor or even any senior attorney.
"They start to believe they are so brilliant, they are so powerful, and they behave like they are above the law," Ugeux said before the verdict was handed down. --- This is exactly the tough lesson what the netas , babus and big biz of India have to be taught. - But to do that we have to reform the system that India has now, a FAKE DEMOCRACY where the rule and enforcement f law for the privileged political class is non-existent. ...( Yesterday another scamster like Bernie Madoff - " Sir Stamford " was handed down a 110 year jail term by a US court for running a fraud financial scheme.)
while laws in USA does not discriminate between the powerful high
profile celebrities and the other people --it is really sad that a man
of the stature of Gupta falling from the dizzy heights of corporate
corridors into the prison. It is rather strange , however that , while
Rajaratnam himself is serving a term of only 11 years, how come Gupta
would get 25 years?
If the similar offense is committed in India,then SEBI the watch dog will ask the complainant to register in the SEBI portal SCORE.This portal will give a number to keep the complainant to go home and sleep. The number will remain ever in the portal saying the matter is looked into.Public should aware of this in all govt depts.But SEC USA is different. MY experience with SEBI for Market manipulation/ Insider trading complaint remains in the web almost 6 months
A rather sad end to a glittering career. An unfortunate lapse of
judgement has cast a damaging slur on an otherwise sterling and upright
personality. Rajat Gupta will be best remembered for the very
significant contribution he made to enhance the image of Indian
enterprise in the West.
A poster child for corruption, nepotism and greed who masqueraded as a ruler of the financial universe for years. Yet another testament that you can attend IIT and Harvard and still think like a corrupt desi politician. Watch for more like him from our so called , 'elite' institutes.
Please Email the Editor