Rajat Gupta, the former Managing Director of McKinsey & Company and board member at Goldman Sachs and Procter & Gamble, was convicted on four of six counts by a federal jury in New York today for providing nonpublic material information to Raj Rajaratnam in 2008. Specifically, Mr. Gupta was convicted of conspiring to commit insider trading and three counts of insider trading (but was acquitted on two other counts of insider trading).
As discussed here, on October 26, 2011, both the SEC and the U.S. Attorney's Office for the Southern District of New York filed charges against Mr. Gupta. Both the federal prosecutors and the SEC alleged that he provided information which he learned during board calls and in other communications and meetings relating to his official duties as a director of Goldman Sachs and Procter & Gamble. For example, the SEC claimed that Mr. Gupta learned certain information regarding Goldman Sachs' impending negative financial results during an October 23, 2008 telephone call with Board members and that "[m]ere seconds after the board call ended," Mr. Gupta telephoned Mr. Rajaratnam, who arranged for certain Galleon funds to begin selling their Goldman Sachs holdings when the markets opened the following morning.
As reported by Peter Lattman and Azam Ahmed in the New York Times (available here):
After a monthlong trial, a jury of eight women and four men took only two days to deliberate before reaching a verdict. The jury found Mr. Gupta guilty of leaking confidential information about Goldman to his former friend and business associate, the fallen hedge fund titan Raj Rajaratnam, on three different occasions in 2008. He was also convicted of conspiring in an insider trading scheme with Mr. Rajaratnam.
Mr. Gupta was found not guilty of two instances of tipping Mr. Rajaratnam, including an allegation that he divulged secret news about Procter & Gamble, where he also served on the board.
Sentencing has been scheduled for October 18, 2012, slightly more than a year after his co-conspirator, Mr. Rajaratnam, was sentenced to a then-record for insider trading cases of eleven years in prison.