New York, Oct 26: Rajat Gupta, a former Indian-American Goldman Sachs director member, was indicted for securities fraud by a US federal court shortly after he surrendered to authorities Wednesday morning.
The six count charges accuse him of engaging in an insider trading scheme with Sri Lankan Raj Rajaratnam, a former billionaire hedge fund manager who was the prime target of the probe.
Rajaratnam was sentenced to 11 years in prison and ordered to pay a $10 million fine earlier this month after being convicted in what prosecutors called the biggest hedge fund insider trading case in US history.
The 62-year-old Gupta, from Westport, Connecticut, is awaiting an appearance at the federal court.
He’s charged with one count of conspiracy to commit securities fraud and five counts of securities fraud. The charges carry a potential penalty of 105 years in prison.
The Securities and Exchange Commission (SEC) originally brought civil fraud charges against Gupta in March. The SEC alleged that, at the height of the financial crisis, he passed along privileged financial information that helped enrich Rajaratnam.
Gupta’s lawyer responded by accusing the SEC of launching a ‘flawed case premised in large part on unreliable evidence being used in an attempt to bring down a man of sterling reputation and remarkable achievements without the procedural safeguards historically accorded to all persons similarly charged.’
A graduate from Harvard Business School, 62-year-old Gupta served as a director at Goldman, Procter & Gamble and the parent company of American Airlines. He has also worked with the Bill and Melinda Gates Foundation.