Open

Coming up

Don't miss

Replay


LATEST SHOWS

DEBATE

Iraq's Christians - Nowhere to Run? (part 2)

Read more

DEBATE

Iraq's Christians - Nowhere to Run?

Read more

MEDIAWATCH

Towards a "Third Intifada"?

Read more

FOCUS

What solutions for California's overcrowded prisons?

Read more

MIDDLE EAST MATTERS

Gaza conflict: Palestinians mark sombre Eid

Read more

WEB NEWS

Celebrities in the Israel-Gaza crossfire

Read more

IN THE PAPERS

Israeli strike takes out Gaza power station

Read more

IN THE PAPERS

French newspaper apologises for Sarkozy story

Read more

BUSINESS DAILY

Last-ditch talks aim to avert Argentina default

Read more

  • Israel says it is 'days' from completing Gaza tunnel hunt

    Read more

  • Scores feared dead in India landslide

    Read more

  • Russia defiant as US, EU unveil 'phase three' sanctions

    Read more

  • Argentina fails to reach deal with holdout creditors

    Read more

  • Liberia shuts all schools as Ebola virus spreads

    Read more

  • US House votes to sue Obama for over-reaching his powers

    Read more

  • Suspect in Jewish Museum attack charged with 'terrorist' murder

    Read more

  • Women should not laugh in public, Turkey's deputy PM says

    Read more

  • Fourth female suicide bomber targets Nigerian city

    Read more

  • US rebounds to 4% growth in second quarter

    Read more

  • Video: Coping with rocket attacks in Israel’s Sderot

    Read more

  • Rats on the rampage at Louvre museum gardens

    Read more

  • France evacuates nationals, closes embassy in Libya

    Read more

  • 'Compelling' signs Kosovo leaders trafficked organs, prosecutor says

    Read more

  • Graphic: Ebola spreads across West Africa

    Read more

  • Video: How tourism is helping Rwanda’s gorillas, ex-poachers

    Read more

Business

Former Goldman CEO charged with insider trading

Text by News Wires

Latest update : 2011-03-02

The Securities and Exchange Commission charged the former director of Goldman Sachs and Procter & Gamble with insider trading Tuesday, claiming Rajat Gupta illegally informed a hedge fund manager associate about the quarterly earnings for both firms.

AFP - The US markets regulator charged former Goldman Sachs and Procter & Gamble director Rajat Gupta on Tuesday with insider trading in a high-profile hedge fund case.
              
The Securities and Exchange Commission announced the charges for "illegally tipping Galleon Management founder and hedge fund manager Raj Rajaratnam with inside information about the quarterly earnings at both firms, as well as an impending $5 billion investment by Berkshire Hathaway in Goldman."
              
Gupta, "a friend and business associate of Rajaratnam," provided him with confidential information he learned as a board member of Goldman and P&G, the SEC charged.
              
Rajaratnam allegedly used the inside information to trade on behalf of some of Galleon's hedge funds, or shared the information with others at his firm who then traded on it ahead of public announcements by the companies.
              
The insider trading by Rajaratnam and others produced more than $18 million in illicit profits and loss avoidance, the regulator said.
              
Gupta, a Connecticut-based business consultant and former managing director of global consulting firm McKinsey & Company, was at the time of the insider trading a direct or indirect investor in at least some of these Galleon hedge funds, according to the markets watchdog.
              
He also "had other potentially lucrative business interests with Rajaratnam."
              
"Gupta was honored with the highest trust of leading public companies, and he betrayed that trust by disclosing their most sensitive and valuable secrets," SEC enforcement division chief Robert Khuzami said in a statement.
              
"Directors who violate the sanctity of board room confidences for private gain will be held to account for their illegal actions."
              
Procter & Gamble announced that Gupta, who joined the board of directors in 2007, had "voluntarily" resigned Tuesday, effective immediately.
              
He "vigorously denied" the SEC's accusations but stepped down "to prevent any distraction to the P&G board and our business," Paul Fox, spokesman for the global pharmaceuticals and consumer products giant, told AFP.
              
P&G is "cooperating fully" with the investigation, he added.
              
According to the SEC, Gupta had tipped off Galleon that P&G would have lower-than-expected sales growth in the 2008 final quarter, allowing the hedge fund to pocket illicit profits of more than $570,000.
              
Gupta joined the Goldman board in November 2006 and served as a member of the Wall Street giant's audit, compensation and corporate governance and nominating committees.
              
The bank's announcement in March 2010 that Gupta, a senior partner emeritus at McKinsey, would not stand for re-election came amid speculation that he was a suspect in the insider-trading probe.
              
The Indian-born naturalized US citizen became chairman of the International Chamber of Commerce last July.
              
The Harvard Business School graduate has been affiliated with a number of organizations, including the United Nations, where former secretary-general Kofi Annan tapped him in 2005 as his special adviser for management reform.
              
The SEC has previously charged Rajaratnam and others in the widespread insider-trading scheme involving the Galleon hedge funds.
              
Billionaire Rajaratnam and co-defendant Danielle Chiesi were indicted in December 2009 by a federal grand jury in New York on charges of using non-public information from company executives to earn about $20 million in illegal profits.
              
Sri Lankan-born Rajaratnam has pleaded not guilty and is expected to stand trial next week.
              
Chiesi, a former consultant with New Castle Funds, pleaded guilty in January to three counts of conspiracy to commit securities fraud.
              
About 30 people have pleaded guilty in the affair.

 

Date created : 2011-03-02

COMMENT(S)