Alleged Board Insider Trading: The Case of Rajat Gupta

Marlene M. Reed; Rochelle R. Brunson

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Alleged Board Insider Trading: The Case of Rajat Gupta

Marlene M. Reed and Rochelle R. Brunson

Baylor University, USA

Volume 10: 2013 pp. 339-360: ABSTRACT

This case recounts the story of Rajat Gupta, a Goldman Sachs board member and senior partner emeritus of McKinsey & Co., who was accused by the government of giving critical non-public financial information to Raj Rajaratnam, Galleon Group founder, during the financial crisis of 2008. The information passed along to Rajaratnam was about a pending $5 billion investment by Warren Buffett’s Berkshire Hathaway in Goldman Sachs at a time when its stock had been faltering. The government alleged that based on this information, Rajaratnam purchased a large number of shares in the company and then sold them when the deal became public and Goldman’s stock rose. Rajaratnam purportedly made $18 million on these trades.