Rajat K. Gupta,
Insider Trading
MAX ANDREWS
Background

Born in Kolkata, India

Father died when he was age 16

Mother died at age 18

Attended Modern School in New
Delhi

Ranked 15th in the nation in the
entrance exam for IIT

Obtained his Bachelors degree in
mechanical engineering from
Indian Institute of technology,
Delhi in 1971

Received an MBA from Harvard
Business School in 1973
Insider Trading

The illegal practice of trading on
the stock exchange to one's own
advantage through having access
to confidential information.

Insider trading is illegal because
it’s a form of securities fraud, and
fraud is viewed as larceny or theft

Insider trading is not a victimless
crime. All stakeholders are
effected.
Goldman Sachs and McKinsey &
Company
Goldman Sachs
McKinsey & Company

Multinational investment banking
firm.

Global management consulting
firm.

Provide investment banking,
securities, investment
management and financial
services.

Solves issues regarding concerns
to senior management.

Serves as an adviser to major
businesses, government and
institutions worldwide.

Provides companies with advise
that can be considered very
important information.


Also provides merger, acquisition
and asset management advice.
Executives are exposed to very
sensitive information
Raj Rajaratnam

Sri Lankan-American former hedge fund manager and founder of
Galleon Group.

Rajat Gupta allegedly told Raj Rajaratnam about a five billion dollar
purchase by Warren Buffet’s Berkshire Hathaway of Goldman
preferred stock.

Raj Rajaratnam conspired to obtain the information through Rajat
Gupta before it went public.

Raj Rajaratnam was reported to have wanted to cooperate with
law enforcement by wearing a wire to tape insider information
discussions with Gupta.

All the evidence against Rajat Gupta was circumstantial.
How is this Insider Trading?

The Goldman Sachs director was
claimed to have been the leader in
leaking out the bank’s boardroom
secrets to Raj Rakaratnam.

Gupta was the most prominent
corporate executive in this case
which led to 79 convictions and not
a single loss.

Raj Rajaratnam reportedly made
approximately $60 million dollars on
insider information.

This leaves a permanent scar on Raj
K. Gupta’s reputation and also hurts
Goldman Sach’s credibility as an
investment bank.
How to avoid insider trading

Watch what kinds of questions you ask when receiving information
on securities.

Always check your sources.

Report to the proper authorities when you receive information
relevant to your portfolio that you’re not sure is public.

If you are hearing information you shouldn’t be hearing, report it
because you could be charged with conspiracy.

Make sure you only trade with people who are clear on insider
trading policies.

Watch how you repay favors.
Citations

"What Is Insider Trading and How to Avoid It – Definition, Laws &
Cases." Money Crashers. SparkCharge Media, 1 Jan. 2014. Web. 28
Apr. 2014. <http://www.moneycrashers.com/what-is-insider-tradingdefinition-laws-cases/>.

Protess, Ben. "Federal Court Rejects Gupta’s Appeal for New
Trial." New York Times. N.p., 25 Mar. 2014. Web. 28 Apr. 2014.
<http://dealbook.nytimes.com/2014/03/25/court-rejects-rajatguptas-appeal/>.