CASE STUDYRAJAT GUPTA

Presented By:Shruti Gupta

OVERVIEW Rajat 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 Sachs’s 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 Vault’s 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 Background MECHANICAL ENGINEER IIT- DELHI (1971)

MBA- HARVARD BUSINESS SCHOOL (1973)

Career Timeline JOINS 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 Trading

• What is insider trading• Who is an insider• What is non-public information

Insider Trading Insider trading is the trading of a corporation's stock or other securities (e.g. bonds or stock options) by individuals with potential access to non-public information about the company.

Why Rajat Is Convicted Of This Insider Trading

Authority 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 mn FBI & 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 Rajaratnam’s case taking

12 days.

Gupta was put up as “free on bail” for a second count.

He planned to appeal.

How it Occurred Pt. 2

Lawyers 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. 3 Rajat 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 GUPTA’S TRAIL