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« INSIDE JOB - Bear Stearns Was Rated AAA | Main | Peter Schiff On Bernanke's Operation Screw »
Saturday
Sep012012

Raj Gupta: Timeline Of Insider Trading Case

UPDATE 2 - Gupta Sentenced to Two Years in Prison

UPDATE - Gupta arrested by FBI in Galleon case

Gupta threw away a distinguished career doling out inside info on Goldman Sachs gleaned while he served on the Board of Directors.  Stephen Friedman, another Goldman Board member has also faced scrutiny.

Source - CNBC

The Securities and Exchange Commission has charged a former Goldman Sachs board member, Rajat Gupta, with illegal insider rading. The SEC says Gupta passed confidential information about Goldman and big consumer products maker Procter & Gamble to Raj Rajaratnam, the central figure in a major hedge fund probe.  Here's a timeline of events according to the SEC's order against Gupta:

June 10, 2008: Goldman CEO Lloyd Blankfein calls Gupta and other directors that evening to inform them of Goldman's strong earnings for the quarter ending May 30.  Gupta later call Rajaratnam's home.

June 11: Rajaratnam makes another call to Gupta before the market opens. After the market opens, Rajaratnam directs Galleon Tech funds' to buy more than 5,500 contracts that are worthless unless the stock hits $170. Goldman shares had opened trading at $167. Rajaratnam also buys more than 350,000 of straight Goldman shares over the next two days.

June 16: Goldman issues a positive earnings preview for the quarter, sending the stock price up more than 2 percent. Sometime after, Rajaratnam sells the 5,500 contracts. Profit: around $7 million.

June 17: Goldman announces its quarterly earnings before the market opens; they beat analysts' estimates. Shares open at $185.04, up 1.6 percent from the close the day before. After the announcement, Rajaratnam sells the funds' shares purchased after he got the confidential information from Gupta on June 10. Profit: around $6.6 million.

Sept. 21: Wall Street is reeling from the failure of big investment bank Lehman Brothers six days earlier. CEO Blankfein tells his firm's board of a possible rescue investment by billionaire investor Warren Buffett's Berkshire Hathaway. Over the next two days, Rajaratnam has the Galleon Tech funds buy 120,000 Goldman shares. He picks up a third of those shares while on the phone with Gupta.

Sept. 23:

3:15 p.m.: Goldman's board has a special meeting by telephone. The directors consider and approve a $5 billion investment by Berkshire and a $2.5 billion public offering of Goldman stock.  Around 3:53 p.m.: Gupta disconnects from the call. Immediately, he calls Rajaratnam from the same line. Less than a minute after their conversation—and just minutes before the 4 p.m. market close—Rajaratnam snaps up another 175,000 Goldman shares. Goldman shares close at $125.05.

Continue reading...

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CNBC Video - Discussing the case and the impact Goldman is likely to see from an investors perspective, with Ron Geffner, former SEC enforcement attorney and Jeffery Harte, Sandler O'Neill.

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Rajat Gupta: Bigger Than Madoff? 

Rajat Gupta may be the most important businessman ever charged with a serious violation of securities laws.  The only people who even comes close to the stature of Gupta are Michael Milken and Bernard Madoff. But despite the vast wealth people had given to Madoff to manage, he was never a member of the inner circle of corporate power in America.

Gupta is one of the most connected people in corporate America that you've never heard of, as Duff McDonald showed in his October 2010 Fortune magazine profile. Gupta spent 34 years at McKinsey, arguably the most important corporate consulting company in the world. In 1994, he was elected head of McKinsey, a position he held for nine years.

Under his tenure, McKinsey grew into a truly global powerhouse, opening at least 20 offices overseas and more than doubling the number of consultants employed, McDonald writes. 

http://www.cnbc.com/id/41853809/

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Rajat Gupta Had Inside Information on $61 Billion P&G Deal in 2005 

http://www.cnbc.com/id/41852969

 

 

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Reader Comments (1)

UPDATE:

Rajaratnam agrees to pay $1.5 million disgorgement in SEC case

http://www.reuters.com/article/2012/12/27/us-rajaratnam-seclawsuit-idUSBRE8BQ01B20121227

U.S. hedge fund manager Raj Rajaratnam has agreed to pay disgorgement of about $1.5 million in a civil lawsuit filed by the Securities and Exchange Commission, and to waive his right to appeal the judgment, court papers showed.

Rajaratnam would make the payment, representing the profits obtained by unlawful means, to the SEC within 90 days after the entry of the final judgment in court records, according to a filing.

Rajaratnam, currently serving a 11-year prison term, was convicted of securities fraud and conspiracy in May 2011. He was accused of running a network of friends and associates who leaked corporate secrets to him for years.

Former Goldman Sachs Group Inc director Rajat Gupta, a former chief of consulting firm McKinsey & Co, has also been charged with leaking tips to Rajaratnam. Gupta denies the charges.

Rajaratnam, the founder of Galleon Group, has already paid $63.8 million in criminal penalties, and a judge had earlier ordered him to pay $92.8 million in a civil case brought by the SEC.

The case is SEC vs Rajaratnam et al, U.S. District Court for the Southern District of New York, No. 11-07566.
Dec 27, 2012 at 8:24 AM | Unregistered Commenterjohn

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