SEC files charges against ex-Goldman Sachs board member

The US Securities and Exchange Commission is charging Rajat Gupta, a former Goldman Sachs board member, with insider trading.

Gupta made $1 million in trading on Goldman in one day, following information regarding Berkshire Hathaway’s intent to invest in Goldman before it was public. The SEC alleged he also gave information about Goldman to Galleon hedge fund manager Rajaratnam at least 3 other times. “The SEC’s Division of Enforcement alleges that Rajat K. Gupta, a friend and business associate of Rajaratnam, provided him with confidential information learned during board calls and in other aspects of his duties on the Goldman and P&G boards. Rajaratnam used the inside information to trade on behalf of some of Galleon’s hedge funds, or shared the information with others at his firm who then traded on it ahead of public announcements by the firms. The insider trading by Rajaratnam and others generated more than $18 million in illicit profits and loss avoidance. Gupta was at the time a direct or indirect investor in at least some of these Galleon hedge funds, and had other potentially lucrative business interests with Rajaratnam,” a statement from the SEC read.