The US Securities and Exchange Commission (SEC) has fined former Goldman Sachs director and board member, Rajat K Gupta, US$13.9 million, for illegally tipping confidential corporate information off to former hedge fund manager Raj Rajaratnam.
Gupta has also been permanently barred from serving as an officer or director of a public company and from associating with any broker, dealer or investment advisor.
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Gupta was accused of disclosing confidential information about Goldman Sachs’ financial results at the peak of the 2008 financial crisis to Rajaratnam who ran Galleon Group, as well as passing on information about Berkshire Hathaway US$5 billion investment in Goldman Sachs.
In June 2012, a New York jury had also convicted Gupta of spilling boardroom secrets to Rajaratnam. Jed S Rakoff of the US district court for the Southern district of New York had sentenced Gupta to two years in jail last October and ordered a US$5 million criminal fine. Gupta, 64, is appealing his June 2012 conviction and two-year prison term.
The SEC previously obtained a record US$92.8 million penalty from Rajaratnam for prior insider trading charges and he was sentenced to 11 years in prison.
In June 2013, the federal appeals court in New York upheld Rajaratnam’s conviction, rejecting his argument that wiretap evidence was used improperly to convict him. Gupta in May argued before the same court that wiretap evidence should have been excluded from his trial as well.
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By GlobalDataGeorge S. Canellos, co-director of the SEC’s division of enforcement, said: "The sanctions imposed today send a clear message to board members who are entrusted with protecting the confidences of the companies they serve."
