Ex-Goldman Board Member Gets Two-Year Sentence for Insider Trading

Rajat Gupta, the former Goldman Sachs director and McKinsey & Co. managing director who rose to the pinnacle of Wall Street, was sentenced to two years in prison for passing inside tips to his business partner.

Bloomberg reports that Gupta, who ran McKinsey from 1994 to 2003, was sentenced Wednesday by U.S. District Judge Jed Rakoff in Manhattan for leaking stock tips to Galleon Group co-founder Raj Rajaratnam. Gupta, 63, was convicted by a jury in June of one count of conspiracy and three counts of securities fraud.

Rakoff ordered Gupta to report to prison on January 8th and fined him $5m, rejecting a bid to allow him to remain free pending appeal. The judge said he would recommend to U.S. Bureau of Prisons officials that Gupta serve his term at the federal prison in Otisville, New York.

The evidence that Gupta passed illegal information about New York-based Goldman Sachs to Rajaratnam, his friend and business partner, 'was not only overwhelming, it was disgusting in its implications', Rakoff said in court.

Gupta leaked information about a $5bn investment in Goldman Sachs by Warren Buffett’s Berkshire Hathaway Inc. (BRK/B) on September 23rd, 2008, and a tip on a quarterly loss. Rakoff said Wednesday that he was especially troubled by Gupta’s actions during this tumultuous period.

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Rajat Gupta Gets Two-Year Sentence for Insider Trading