The Securities and Exchange Commission sued Rajat Gupta, who owns a home on Beachside Avenue, on Tuesday for allegedly providing insider information worth millions to a hedge fund founder. No criminal charges have been filed yet.
The SEC says Gupta, 61, fed information to friend and business associate Raj Rajaratnam, of Galleon Group. Gupta served on the board of directors at Goldman Sachs and Proctor & Gamble when he allegedly gave Rajartnam insider information about quarterly earnings and an impending $5 billion investment by Berkshire Hathaway in Goldman Sachs.
The insider trading generated more than $18 million in illicit funds, according to the SEC. He resigned Tuesday from Proctor & Gamble. He also no longer serves on the Goldman Sachs board.
“Gupta was honored with the highest trust of leading public companies, and he betrayed that trust by disclosing their most sensitive and valuable secrets," said Robert Khuzami, director of the SEC's Division of Enforcement, in a press release. "Directors who violate the sanctity of board room confidences for private gain will be held to account for their illegal actions."
Gupta lives in an eight-bedroom mansion on a vast 2.28 acre property. His property, which he purchased in 1999, is appraised at $12.5 million.
Gupta's laywer, Gary Naftalis, says his client is innocent. The lawyer's past clients have included former Disney CEO Michael Eisner and various other executives.
"The SEC's allegations are totally baseless. Mr. Gupta's 40-year record of ethical conduct, integrity, and commitment to guarding his clients' confidences is beyond reproach," he said in a statement. "Mr. Gupta has done nothing wrong and is confident that these unfounded allegations will be rejected by any fair and impartial fact finder.
Naftalis added, "There is no allegation that Mr. Gupta traded in any of these securities or shared in any profits as part of any quid pro quo. In fact, Mr. Gupta had lost his entire $10 million investment in the GB Voyager Fund managed by Rajaratnam at the time of these events, negating any motive to deviate from a lifetime of honesty and integrity."