The Rajat Gupta Files (Post 1)

[ Picture taken from hedgeco.net]

With Raj Rajaratnam slapped a record breaking fine of $ 92m to be paid to it, the SEC now focuses on Rajat Gupta, the former head McKinsey. The SEC seems to be confident of its case against the former director at Goldman Sachs and P&G. It is believed that Gupta met Rajaratnam, a hedge fund manager and the founder of Galleon Group and became good friends. It has been alleged that as they became friends, information started to flow from the Board of Goldman Sachs to Rajaratnam, who started to invest accordingly.

In Gupta’s trial, the case is based solely on circumstantial evidence, as opposed to that in the Rajaratnam trial where there was sufficient evidence to charge Rajaratnam. The bulk of the evidence the SEC has against Gupta is that Rajaratnam entered into trades’ minutes after calls from Gupta, on most occasions immediately after Goldman Sachs Board Meetings, attended by the latter. The SEC has no direct evidence against Gupta. 
Gupta has pleaded not guilty to all charges in a Federal Court and has been released on a $10m bail bond. With the Prosecution being headed by Indian born Preet Barara, the US Attorney for the Southern District of New York, confident of getting a conviction against Gupta, it would be interesting to look at the strategy of both sides when the trial begins on April 9, 2012.

In a series of posts, this being the first of which, I would shed more light on the entire issue.