India-born former head of the McKinsey & Co. consulting firm Rajat Gupta, 63, was convicted by a US court on Friday for insider trading, which means he will be facing 20 years in the United States jail.
The jury has charged Gupta on five counts of securities fraud and one count of conspiracy to commit the fraud by providing inside information to hedge fund manager Raj Rajaratnam, who was already convicted and sentenced to 11 years in jail.
The main charge was that he had passed on the information of Goldman Sachs and Procter & Gamble in 2008 and 2009 where he was a board governor based on which Rajaratnam placed trades within 40 seconds. The firm gained $23 million in total, argued the prosecutors.
The top financial guru who served on the boards of some of the top companies in the world has resigned from them within days after the civil case filed by the Securities and Exchange Commission (SEC), including including Procter & Gamble and American Airlines parent AMR Corp and India’s premier b-school Indian School of Business.
Born on December 2, 1948 to an Indian journalist and freedom fighter in West Bengal, Gupta was a longtime senior partner and director at management consultancy McKinsey & Company, serving as managing director (chief executive) from 1994 to 2003.
He was the first Indian-born CEO of a global corporation and after retiring from it, he became its partner emeritus. He has also served as corporate officer, board director and strategic advisor to several large and notable global firms like Goldman Sachs, Procter and Gamble and American Airlines, and non-profits including The Gates Foundation, The Global Fund and the International Chamber of Commerce.
Rajat Gupta is also the co-founder of the Indian School of Business with Anil Kumar, the American India Foundation with Victor Menezes and Lata Krishnan, New Silk Route with Parag Saxena and Menezes, and Scandent with Ramesh Vangal.
Initially, Gupta was charged in March 2011 with insider trading by the United States Securities and Exchange Commission as part of an ongoing and wide-ranging insider trading case in which his partners Raj Rajaratnam and Anil Kumar were convicted or pleaded guilty, respectively.
Gupta’s conversations on tape with Rajaratnam while Gupta was a board member of Goldman Sachs became his undoing in the case. In the wake of the SEC charges, Gupta resigned the majority of his corporate and philanthropic positions.
Though August 5, 2011, the civil charges were dropped by the SEC, the US federal prosecutors filed criminal charges against Gupta on October 26, 2011, and he surrendered to FBI last year.