New York (HedgeCo.Net) – Rajat Gupta, a former member of the Board of Directors at Goldman Sachs, has been fined $13.9 million to settle related civil charges of feeding inside information to his friends.
He was accused of conspiracy and securities fraud crimes stemming from his involvement in an insider trading scheme with his business partner and friend, Raj Rajaratnam, the founder and former head of the Galleon Group hedge fund.
Gupta received a prison sentence of 2 years in federal prison. Gupta was found guilty on June 18th 2012 by a jury in Manhattan federal court.
The SEC says that from 2007 through January 2009, Gupta repeatedly disclosed material, non-public information (“inside information”) that he acquired in his capacity as a member of the Board of Directors of Goldman Sachs, with the understanding that Rajaratnam would use the inside information to purchase and sell securities. Rajaratnam, in turn, caused the execution of transactions in the securities of Goldman Sachs on the basis of the inside information and shared the inside information with others at Galleon, thereby earning illegal profits, and illegally avoiding losses, of millions of dollars. On separate occasions that were proven at trial, Gupta gave Rajaratnam inside information that included highly sensitive and secret information.
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