Washington: Rajat Gupta, head of McKinsey & Co for most of the '90s, and one of the consulting world's most revered figures, has been formally charged with insider trading.
US news agencies report that Gupta surrendered voluntarily to Federal Bureau of Investigation agents this morning; he is expected to contest the allegations as baseless.
The Securities and Exchange Commission has charged Gupta with insider trading for illegally tipping convicted hedge fund manager Raj Rajaratnam while serving on the boards of Goldman Sachs and Procter & Gamble (P&G). The SEC also filed new insider trading charges against Rajaratnam after first charging him with insider trading in October 2009.
According to the SEC's complaint filed in federal court in Manhattan, Gupta illegally tipped Rajaratnam with insider information about the quarterly earnings of both Goldman Sachs and P&G as well as an impending $5 billion investment in Goldman by Berkshire Hathaway at the height of the financial crisis. Rajaratnam, the founder of Galleon Management who was recently convicted of multiple counts of insider trading in other securities stemming from unrelated insider trading schemes, allegedly caused various Galleon funds to trade based on Gupta's inside information, generating illicit profits or loss avoidance of more than $23 million.
Full details of the SEC's charges are here.