Is It Insider Trading if Tips Don't Result in Payoff? Reported Gupta Charges Will Test Theory
Posted Oct 26, 2011 11:35 am CDT
Updated: Former Goldman Sachs board member Rajat Gupta has turned himself in to face charges he leaked inside information to Galleon Group hedge fund founder Raj Rajaratnam, according to published reports.
Gupta turned himself in this morning, the Wall Street Journal Law Blog reports. The charges remain sealed, but news organizations have picked up details from other court filings.
Gupta was heard on a wiretap in Rajaratnam’s insider trading trial discussing what prosecutors said was confidential information about Goldman, report the Associated Press, the Wall Street Journal (sub. req.) and the New York Times DealBook blog. Rajaratnam was sentenced this month to 11 years in prison after he was convicted of securities fraud and conspiracy.
Gupta, who once led consulting firm McKinsey & Company, isn’t accused of receiving money for revealing secrets, the Wall Street Journal says. The expected charges “are likely to reveal that the government believes that insider trading doesn’t always involve swapping information for money,” according to the newspaper.
Gupta’s lawyer, Gary Naftalis, says his client is innocent. He told the Wall Street Journal that Gupta lost his entire investment with Rajaratnam, “negating any motive to deviate from a lifetime of probity and distinguished service.”
Updated at 9 a.m. to report that Gupta has turned himself in.