MANHATTAN (CN) – Federal prosecutors issued a six-count superseding indictment against Rajat Gupta, accusing him of participating in Raj Rajaratnam’s inside trading scheme.
Gupta, a former member of the boards of the Goldman Sachs Group and Procter & Gamble, is accused of conspiring with Galleon Group founder Raj Rajaratnam to commit securities fraud. Rajaratnam was sentenced in October 2011 to 11 years in prison and in November he was fined $93 million. A federal jury convicted him in May 2011 of 14 counts of inside trading.
The 25-page superseding indictment claims that Gupta told Rajaratnam inside information that Gupta acquired from his position on the corporate boards, “with the understanding that Rajaratnam would use the inside information to purchase and sell securities … thereby earning illegal profits (and illegally avoiding losses) of millions of dollars.” (Parentheses in indictment.)
Among other things, Gupta is accused of leaking information about Goldman Sachs’ quarterly earnings, and about Berkshire Hathaway’s $5 billion investment in Goldman Sachs, during the worldwide financial crisis.
Prosecutors say Gupta called Rajaratnam about the Berkshire Hathaway investment “approximately 16 seconds after” he hung up his telephone after participating in a conference call with the Goldman Sachs Board on Sept. 23, 2008.
Gupta is charged with one count of conspiracy to commit securities fraud and five counts of securities fraud.