New York Criminal Lawyer Blog
A former director of financial firm Goldman Sachs has been accused of providing illegal business tips to the head of the Galleon Group, another financial firm. The Securities and Exchange Commission (SEC) alleges that Rajat K. Gupta provided information about Warren Buffet’s intentions to invest in Goldman Sachs to Raj Rajaratnam hours before the investment was complete. This tip allowed the Galleon Group to earn $900,000 in profits after the company purchased 175,000 Goldman Sachs shares. Providing tips like this to other business people is illegal and unethical, and is charectarized as White Collar Crime.
According to the SEC, this is not the first time Gupta has provided Rajaratnam with trading tips. Gupta, who also sits on the board of Proctor and Gamble (P&G) alerted Rajaratnam of the company’s quarterly earnings early which prompted the Galleon Group to purchase shares right before quarterly earnings announcements. The Galleon Group earned more than $13.6 million in profits.
Gupta and Rajaratnam met about ten years ago during their work with the Indian School of Business. Since then, the two men have shared thousands of phone calls, lunches and formed business alliances such as the New Silk Route, a financial firm specializing in investment opportunities in India. Even though Rajaratnam’s role in New Silk Route is unclear, as he never took an active role in the firm, the two men are linked to the company, states a New York Criminal Lawyer. Gupta’s lawyer insists that the two men are friends and business colleagues and that Gupta has 40 years of experience in business and has never been accused of any illegal activities during this time.
Rajaratnam is currently on trial for insider trading. For his part, Gupta is being closely investigated by the SEC. Charges may be pending including Grand Larceny and Securities Fraud. In addition to being the former director of Goldman Sachs, Gupta is also a senior advisory at the Bill and Melinda Gates Foundation and sits on the board of AMR, the company that owns American Airlines. Gupta stepped down from his position on the Proctor and Gamble board to spare the company any embarrassment or loss of profits.
In addition to having a clean business record, Gupta’s lawyer also states that Gupta lost about 10 million dollars after one of Rajaratnam’s investment funds collapsed during the recession. He lawyer states that this further proves the Gupta is not guilty of any wrongdoing as he lost a substantial amount of money.
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