Gupta Insider Trial Postponed Indefinitely
A U.S. Securities and Exchange Commission judge postponed a hearing for Rajat Gupta, the former Goldman Sachs Group Inc. (GS) director scheduled to face accusations that he leaked inside information about the company.
Chief Administrative Law Judge Brenda P. Murray granted a six-month stay of the proceeding, which was scheduled for July 18, according to a June 20 order posted on the SEC’s website. The SEC said elsewhere on its website that the hearing had been “postponed indefinitely.”
Gupta, 62, was accused by the SEC in March of having passed confidential information to Galleon Group founder Raj Rajaratnam in 2008 about Berkshire Hathaway Inc.’s $5 billion investment in Goldman Sachs. Rajaratnam, who was convicted May 11 of directing an insider-trading ring, faces almost 20 years in prison at his July 29 sentencing. Gupta, a former McKinsey & Co. managing partner, isn’t facing criminal charges.
Rather than pursuing claims against Gupta in federal court, the SEC filed an administrative proceeding, which is heard by a judge employed by the agency. Gupta, who has denied the claims, sued the SEC in March, saying the administrative action would deny him the right to a jury trial.
A phone call to Gupta’s attorney Gary Naftalis wasn’t immediately returned. In the March lawsuit, Naftalis said “Gupta denies all allegations of wrongdoing and stands ready to mount a defense against each and every one of the commission’s charges.”
John Nester, an SEC spokesman, declined to comment.
Conference Call
According to the SEC, Gupta called Rajaratnam immediately after a September 2008 conference call during which the Goldman Sachs board considered and approved an investment by Warren Buffett’s Berkshire Hathaway as well as a public offering.
Within a minute of Gupta’s call, Rajaratnam arranged for Galleon funds to purchase more than 175,000 Goldman Sachs shares, the SEC said. Galleon sold the shares the following day after the information became public, making illicit profits of more than $900,000, the SEC said.
Gupta stepped down from the Goldman Sachs board last year and has also resigned from board positions at other companies, including Procter & Gamble and AMR Corp.
To contact the reporter on this story: Joshua Gallu in Washington at jgallu@bloomberg.net
To contact the editor responsible for this story: Lawrence Roberts at lroberts13@bloomberg.net
Former Goldman Sachs Director Rajat Gupta
Seokyong Lee/Bloomberg
Former Goldman Sachs director Rajat Gupta.
Former Goldman Sachs director Rajat Gupta. Photographer: Seokyong Lee/Bloomberg
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