A Goldman Sachs director, Rajat Gupta, is now under investigation for passing inside info to Galleon head Raj Rajaratnam, says the WSJ.
Gupta is also a board member of Procter & Gamble and American Airlines parent, AMR. He is the ex-head of consulting firm McKinsey & Co.
There may not be anything here other than that Gupta and Raj were good buddies and Raj was frantically trading Goldman stock during the financial crisis. (Though that in itself is something.)
But the mere suggestion that Gupta passed confidential information to Raj about Goldman Sachs would be devastating to Gupta’s reputation.
Goldman’s name emerged in a government letter listing companies whose trading, by Mr. Rajaratnam and others in the Galleon case, the U.S. is investigating. The March 22 letter said the government is scrutinizing trades by Mr. Rajaratnam and others in Goldman Sachs from June 2008 through October 2008, a time when Goldman shares gyrated amid the bankruptcy of Lehman Brothers Holdings and concerns about the future of all major investment banks.
As part of that focus, the government is examining whether Rajat Gupta—a current Goldman director, former head of McKinsey & Co. and close associate of Mr. Rajaratnam’s—shared inside information about Goldman, the people close to the situation say.
No criminal charges or other allegations have been filed against Mr. Gupta, nor is there any indication that investigators are looking at his own stock trading. A spokesman for Mr. Gupta said, “Mr. Gupta is unaware of any examination of any such issue and has done nothing wrong.”…
Messrs. Rajaratnam and Gupta spoke frequently, and Mr. Gupta was invited to attend parties hosted by Galleon, an individual close to the situation says.
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