Rajat Gupta, the former McKinsey chief executive officer accused of leaking corporate secrets to Galleon Group’s Raj Rajaratnam, has been found guilty on four of six counts, according to a U.S. Southern District spokeswoman. Mr. Gupta faces up to 20 years in prison on each of three fraud counts, and five years on one count of conspiracy. He will be free on bail until his sentencing on Oct. 18.
“Almost two years ago, we said that insider trading is rampant, and today’s conviction puts that claim into stark relief,” said U.S. Attorney Preet Bharara in an e-mailed statement. “Having fallen from respected insider to convicted inside trader, Mr. Gupta has now exchanged the lofty board room for the prospect of a lowly jail cell.”
Mr. Rajaratnam, the billionaire hedge fund manager convicted of insider trading last year, is currently serving an 11-year sentence. Matthew Kluger, a former attorney convicted of insider trading earlier this year, caught a 12-year sentence from a Newark court earlier this year.
According to the Wall Street Journal:
The case was a big victory for prosecutors. Much of the evidence against Mr. Gupta was circumstantial, including phone records that showed he promptly called Raj Rajaratnam after receiving confidential information. The billionaire founder of hedge fund Galleon Group then ordered his funds to trade on the inside information. Mr. Rajaratnam was convicted of insider trading last year and sentenced to more than 11 years in prison.
Mr. Gupta, who had wanted to testify in his own defense, ultimately took the advice of his lawyers and elected not to, believing his best chance at acquittal was to raise doubts about the government’s case, according to a friend of Mr. Gupta’s.
We’ll have more details and statements as they emerge.