Ex-McKinsey Chief and Ex-Goldman Sachs Board Member Is Sued in SEC Insider-Trading Case
A former managing director of global management consultant McKinsey & Company has been accused of providing tips about Goldman Sachs Group Inc. and Procter & Gamble Co. to a defendant in a high-profile insider-trading case.
Rajat K. Gupta, 62, who was a member of the board of directors of both Goldman Sachs and P&G at the time, has been civilly sued by the U.S. Securities and Exchange Commission, the Wall Street Journal reports.
He is accused of providing Galleon Group founder Raj Rajaratnam, who also has been civilly sued by the SEC, with inside information including 2008 financial results for both companies and advance news of a $5 billion investment in Goldman Sachs by Warren Buffett’s Berkshire Hathaway Inc.
The SEC says the tips generated some $18 million. It also says that Gupta was himself an investor in some of the Galleon funds, Bloomberg reports.
However, his lawyer, Gary Naftalis, says Gupta made no profit from the alleged insider trading and instead lost his entire $10 million investment in a Rajaratnam fund, Bloomberg reports.
“The SEC’s allegations are totally baseless,” Naftalis says in a written statement. “Mr. Gupta has done nothing wrong and is confident that these unfounded allegations will be rejected by any fair and impartial fact-finder.”
Gupta left McKinsey in 2007 and did not run for re-election to the Goldman Sachs board last year. He resigned today from the P&G board.
Additional and related coverage:
ABAJournal.com: “The Feds Were Listening: Wiretaps Led to Arrest of Billionaire Hedge Fund Manager”
ABAJournal.com: “Secret SEC Data-Mining to Fuel New Insider-Trading Cases; Lawyers Targeted”
DealBook (New York Times): “Former Goldman Director Charged With Insider Trading”
The Guardian: “Lawsuits could cost Goldman Sachs up to $3.4B”
