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Rajat Gupta convicted of insider trading

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New York: Rajat Gupta, former managing director of McKinsey & Co, and one of the consulting world's most high profile figures, was convicted on Friday of insider trading.

Gupta, who led McKinsey for most of the 1990s, and was later a director at Goldman Sachs, was found guilty of leaking insider information to hedge-fund manager Raj Rajaratnam.

The jury in New York took just two days to convict Gupta on charges of securities fraud and conspiracy.

Gupta faces up to 20 years in jail. He is free on bail until he is sentenced on October 18.

The Securities and Exchange Commission had accused Gupta of using his privileged status at Goldman and Proctor & Gamble to supply tips to Rajaratnam, who himself was convicted of insider trading last year and is now serving an 11 year jail term.

The most striking allegation was that Gupta told Rajaratnam that Warren Buffett was investing $5bn in Goldman Sachs. He apparently called Rajaratnam a minute after taking part in a conference call with his Goldman colleagues and Galleon, Rajaratnam's hedge fund, bought $43m of Goldman stock in the final three minutes of the trading day and made nearly $1m on the trade.

A jury of eight men and four women found Gupta guilty, at the end of a four week trial, which had heard testimony from some of Wall Street's most revered names, including Lloyd Blankfein, Goldman's chief executive — and had featured the controversial use of wire-taps.

The SEC has now brought charges against some 60 people in its latest campaign against insider trading, and Gupta is its most senior victim.

The conviction of Rajat Gupta, 63, is a remarkable fall from grace for the man who grew up as an orphan in India before coming to the US, graduating from Harvard Business School, and rising to lead McKinsey.

It is also an embarrassing shock for the all-powerful McKinsey & Co. The firm has not commented.

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