Former McKinsey boss facing charges
US FEDERAL prosecutors were expected to file criminal charges overnight against Rajat Gupta, the most prominent business executive ensnared in an aggressive insider trading investigation.
US FEDERAL prosecutors were expected to file criminal charges overnight against Rajat Gupta, the most prominent business executive ensnared in an aggressive insider trading investigation.The case against Mr Gupta, 62, who is expected to surrender to FBI agents, would extend the reach of the government's inquiry into America's most prestigious corporate boardrooms.Most of the defendants charged with insider trading over the past two years have plied their trade exclusively on Wall Street.The charges would also mean a stunning fall from grace of a trusted adviser to political leaders and the world's most celebrated companies.A former director of Goldman Sachs and Procter & Gamble and the long-time head of McKinsey & Company, the elite consulting firm, Mr Gupta has been under investigation over whether he leaked corporate secrets to Raj Rajaratnam, the hedge fund manager who was sentenced this month to 11 years in prison for trading on illegal stock tips.While there has been no indication yet that Mr Gupta profited directly from the information he passed to Mr Rajaratnam, securities laws prohibit company insiders from divulgingcorporate secrets to those who then profit from them.The case against Mr Gupta would tie up a major loose end in the long-running investigation of Mr Rajaratnam's hedge fund, the Galleon Group. Yet federal authorities continue their campaign to ferret out insider trading.Gary Naftalis, a lawyer for Mr Gupta, said in a statement: "The facts demonstrate that Mr Gupta is an innocent man and that he acted with honesty and integrity."Mr Gupta has also been a philanthropist, serving as a senior adviser to the Bill & Melinda Gates Foundation.His name emerged just a week before Mr Rajaratnam's trial in March, when the Securities and Exchange Commission filed an administrative proceeding against him.The agency accused Mr Gupta of passing confidential information to Mr Rajaratnam, who then traded on the news.The details were explosive. Authorities said Mr Gupta gave Mr Rajaratnam advanced word of Warren Buffett's $5 billion investment in Goldman Sachs during the darkest days of the financial crisis.At the time, federal prosecutors named Mr Gupta a co-conspirator of Mr Rajaratnam, but never charged him.Around his retirement in 2007, he and Mr Rajaratnam helped start New Silk Route, a private equity firm focused on investments in India.