With Gupta’s Arrest, Insider Inquiry Goes Beyond Wall St.
Rajat K. Gupta, a former director at Goldman Sachs and Procter & Gamble, pleaded not guilty Wednesday to insider trading charges, setting the stage for a courtroom battle that will extend the government’s broad crackdown on Wall Street to the corporate boardroom.
On Wednesday, a federal grand jury in Manhattan charged Mr. Gupta, 62, with one count of conspiracy to commit securities fraud and five counts of securities fraud. He is accused of sharing corporate secrets about Goldman and Procter & Gamble with Raj Rajaratnam, the co-founder of the Galleon Group who was sentenced to 11 years in prison earlier this month for insider trading.
The details of the indictment, many of which came out during Mr. Rajaratnam’s trial and a previous action by the Securities and Exchange Commission, could prove explosive; he is the first executive from the upper echelons of corporate America to be implicated in the far-reaching scandal.
“Rajat Gupta was entrusted by some of the premier institutions of American business to sit inside their boardrooms, among their executives and directors, and receive their confidential information so that he could give advice and counsel for the benefit of their shareholders,” Preet Bharara, the United States attorney in Manhattan, said in a statement. “As alleged, he broke that trust and instead became the illegal eyes and ears in the boardroom for his friend and business associate, Raj Rajaratnam, who reaped enormous profits from Mr. Gupta’s breach of duty….”