Rajat Gupta snared in Wall Street’s
biggest insider trading scandal
BUSINESS
India Abroad
March 11, 2011
SUMAN GUHA MOZUMDER
When Rajat K Gupta was appointed managing director worldwide, McKinsey & Company, in 1994,
Tom Peters, former partner at McKinsey
and best-selling management guru, had
said, ‘he is the best thing to happen to
McKinsey since Marvin Bower’s days at the
firm.’
After he retired from McKinsey in 2003
after 30 years of service and went on to
serve as board member of top American
companies and as advisor to then United
Nations secretary general Kofi Annan,
Gupta continued to grow in stature and
fame for his vision, integrity and creativity.
President George W Bush once congratulated Gupta at a Rose Garden event for his
compassion and concern. ‘It is important
for people who have been successful in the
business world to contribute something
back to society. Rajat, thank you for that
spirit, and thank you for that compassion
and concern,’ Bush had said.
Last week the reputation one of the most
revered business and management icons of
the Indian-American community came
under a cloud after the Security and
Exchange Commission charged him with
insider trading.
Gupta, 62, who has served on the boards
of directors at Goldman Sachs and Procter
& Gamble, was charged with illegally tipping off Raj Rajaratnam — the Sri Lankan
managing member of Galleon Management
LLC who was arrested last year in connection with the largest insider trading on Wall
Street involving a hedge fund and later
freed on bail — with inside information
about quarterly earnings at both firms.
The SEC’s division of enforcement has
alleged that Gupta provided Rajaratnam
with confidential information he learned
during board calls and ‘in other aspects of
his duties’ on the Goldman and P&G
boards. According to the civil complaint,
Rajaratnam used the inside information to
trade on behalf of some of Galleon’s hedge
funds, or shared the information with oth-
ers at his firm who then traded on it ahead
of public announcements by the firms.
Rajat Gupta
‘A big negative for the community’
The SEC charges against Rajat Gupta have shocked some of his friends and acquaintances. Navneet S Chugh, a high- profile California-based attorney, who was on the board of
the America India Foundation, which Gupta co-chairs, till
December 31, 2010, believes Gupta cannot be guilty.
