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Rajat Gupta Convicted of Insider Trading

Rajat K. Gupta, the retired head of the consulting firm McKinsey & Company and a former Goldman Sachs board member, was found guilty on Friday of conspiracy and securities fraud for leaking boardroom secrets to a billionaire hedge fund manager. He is the most prominent corporate executive convicted in the government’s sweeping investigation into insider trading. The case, which caps a wave of successful insider trading prosecutions over the last three years, is a significant victory for the government, which has penetrated some of Wall Street’s most vaunted hedge funds and reached into America’s most prestigious corporate boardrooms. It also demonstrated that prosecutors could win an insider trading case largely built on circumstantial evidence like phone records and trading logs. Previous convictions, as in the trial of Raj Rajaratnam, the hedge fund manager on the receiving end of Mr. Gupta’s assumed tips, have relied more heavily on the use of incriminating wiretaps. Mr. Gupta is one of the 66 Wall Street traders and corporate executives charged with insider trading crimes by Preet Bharara, the United States attorney in Manhattan, since 2009. Of those, 60 have either pleaded guilty or been found guilty. Juries have convicted all seven defendants who have gone to trial.

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