In March 2010, before the Board member had been charged with revealing insider details about Goldman’s earnings and Buffett’s investment, Rajat Gupta got a nice review from his former boss, Lloyd Blankfein.
“Rajat has made important contributions to Goldman Sachs as a board member,” said Lloyd C. Blankfein, Chairman and CEO of The Goldman Sachs Group, Inc.
“His independent advice, keen understanding of the issues and belief in our culture has had a tremendous impact on our firm.”
He made a tremendous impact alright. Today’s charges are not just hugely embarrassing for the firm, they’re hurting Goldman share price.
Goldman’s involvement in one of the biggest insider trading scandals of the decade could be devastating. The charges embarrass two of the firm’s biggest supporters. Lloyd Blankfein, who told his Board members intimate details about information that would materially affect the share price before it was released to the public (this is probably standard practice). And Warren Buffett, who had the details of his $5 billion investment that was meant to indicate his deep “trust” in the firm (at a critical time during market turbulence in 2008) leaked. Buffett’s reputation was crystal clear until today.
But Gupta is denying everything, by the way.
Gary Naftalis, Gupta’s lawyer says that the “SEC’s allegations are totally baseless,” and his client “has done nothing wrong and is confident that these unfounded allegations will be rejected by any fair and impartial fact finder.”
Hat tip @BergenCapital