Former Goldman Sachs Director Rajat Gupta Found Guilty Of Fraud

Former Goldman Sachs director Rajat Gupta has been convicted of conspiracy and three counts of securities fraud after he was accused of feeding confidential information to a corrupt hedge funds manager. A jury also acquitted Gupta of two other securities fraud counts.

As the verdict was read Gupta showed no visible signs of reaction as his daughters cried and hugged. The 63-year-old former head of Goldman Sachs has been the most prominent defendant prosecuted so far in a wide-ranging probe targeting insider trading within the hedge fund industry. Investigators have collected damning information through the use of wiretaps and other data collection means.

Rajat Gupta is the second big name with involvement in the hedge funds industry to be prosecuted in less than a year, last year his long-time friend and billionaire Raj Rajaratnam was found guilty of securities fraud after he worked with Gupta to avoid his own economic meltdown during the 2008 economic downturn. Rajaratnam was sentenced in October to an 11-year prison term for insider-trading.

When playing back recorded conversations between the two men prosecutors said Gupta was so open about Goldman board secrets that it was as if “he was talking about what happened at a Yankee game.”

Rajat Gupta’s defense said the wiretapped conversations only created the “illusion” that legitimate business dealings were in some way being used to create fraudulent activities. His defense went on to state, “that is a gambit that can bamboozle people into thinking something was proven when it wasn’t.”

In another conversation played during his trial Gupta was asked by Rajaratnam about direct plans for Goldman Sachs to purchase a struggling bank. Raj specifically asked:

“Have you heard anything along that line?”

To which Gupta responded:

“Yeah. This was a big discussion at the board meeting.”

Rajat Gupta has not yet been sentenced, although his sentencing could lead to a similar 11-year prison term given his direct involvement apparently with many of his friends decision making processes