Case study Rajat Gupta
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CASE STUDYRAJAT GUPTA
Presented By:Shruti Gupta
OverviewRajat Gupta, corporate director at Goldman Sachs (and once at Mckinsey).Found guilty of 3 securities frauds and of relaying confidential Goldman Sachs boardroom information to hedge fund titan Rajaratnam at Galleon Group.Caught via government-placed wiretaps listening to Rajaratnam and Gupta discussing Warren Buffett's Berkshire Hathaway Inc.s $5 billion investment and Goldman Sachss first quarterly loss.Rajaratnam bought Goldman Sachs shares for profit.Found guilty of 3 securities frauds and of relaying confidential Goldman Sachs boardroom information to hedge fund titan Rajaratnam at Galleon Group.Faced 20 years for fraud charges, 5 for conspiracy charge, but went for 2.
Goldman Sachs is a leading investment banking and financial consulting firm.
Ranked 68 by Fortune 500.
Other small sources constantly rate them high up.
McKinsey and Co. is a leading senior management consulting firm.
Ranked No. 1 under Vaults consulting rankings for 2014.
Manager in question has been on board of directors for both companies, as well as The Bill and Melinda Gates Foundation, American Airlines, and Proctor and Gamble.
Why Is This Case So Significant?
Educational BackgroundMECHANICAL ENGINEER IIT- DELHI (1971)MBA- HARVARD BUSINESS SCHOOL (1973)Career TimelineJOINS NEWYORK OFFICE OF MCKINSEY & CO. (1973)BECAME WORLDWIDE MD OF MCKINSEY & CO. (1994)CO FOUNDED INDIAN SCHOOL OF BUSINESS (1997)STEPS DOWN FROM MCKINSEY (2003)STARTS SERVING AS DIRECTOR IN GOLDMAN SACHS. (2006)BEGINS SERVING AS DIRECTOR IN PROCTOR & GAMBLE (2007)
Insider TradingWhat is insider tradingWho is an insiderWhat is non-public information
Insider Trading Insider tradingis the trading of acorporation'sstockor othersecurities(e.g.bondsorstock options) by individuals with potential access to non-public information about the company.
Why Rajat Is Convicted Of This Insider TradingAuthority to sit in board meetings and access to confidential information in premier American companies.Passed non-public information to GALLEON Group president Raj Rajanatnam.Total profits from illegal trade tuned up to $ 17.5 mnFBI & SEC have the phone tapes of the both two.
Galleon group president Raj Rajaratnam
The Rajat Gupta TrailAn unlucky manJun 14th 2012, 23:47 by T.E. | NEW YORK
Charges Against Mr. Rajat
How It Occurred??2 described court meetings in 2012 and 2014.Wiretaps reveal insider trading between Rajaratnam and Gupta.Gupta is convicted.11 of the 12 jury members believe he is guilty, until evidence convinces the 12th. Took only 10 hours, compared to Rajaratnams case taking 12 days.Gupta was put up as free on bail for a second count.He planned to appeal.
How it Occurred Pt. 2Lawyers challenge conviction by mentioning a $10 million fallout Gupta had with Rajaratnam.Lawyers also claim Rajaratnam never traded based on the exchanged information.Prosecutors said Rajaratnam tipped Gupta off.Lawyers claim Gupta never benefitted or traded on any tip.Prosecutors pieced together phone calls and other exchanges supported by testimonies that included Goldman Sachs CEO Lloyd Blankfein.
How it Occurred Pt. 3Rajat wanted new trail in 2014, but court rejected it.Wiretaps are mentioned again, and lawyers say what Rajaratnam says is the self-serving hearsay of a known fabulist.Prosecutors claim it is non hearsay.Rajat was sentenced to 2 years, freedom pending appeal.Appeal is rejected.
COURT ROOM SKETCH OF RAJAT GUPTAS TRAIL