Wall Street Executive Faces Insider Trading Charges

Posted October 26th, 2011 at 12:00 pm (UTC-5)
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A prominent Wall Street executive has surrendered to U.S. authorities to face charges that he illegally leaked confidential corporate information in an insider stock trading case.

Rajat Gupta, a native of India, was once the head of the well-known McKinsey global consulting firm and later a director at the worldwide Goldman Sachs investment bank. But on Wednesday the Federal Bureau of Investigation accused him of giving inside information from a 2008 Goldman board meeting to a major Wall Street investor, Raj Rajaratnam, who was recently sentenced to an 11-year prison term for insider trading.

The case against the 62-year-old Gupta is part of a U.S. crackdown on the use of confidential corporate information to gain an edge in high-stakes financial stock trading. In the last two years, federal prosecutors have accused 55 business officials with insider trading, with all but four of them convicted or pleading guilty.

The government alleges that within minutes of the Goldman board meeting, Gupta told Rajaratnam that the bank was about to disclose that it had lost money in the previous three-month period and that a key U.S. billionaire, Warren Buffett, was going to invest $5 billion in the company.

The case against Gupta is unusual in that he is not alleged to have received any money for the information. His lawyer called the charges “totally baseless” and said that Gupta has always acted with honesty and integrity.