Yesterday, Susan Pulliam of the Wall Street Journal broke the news that Rajat Gupta, a Goldman Sachs director, is under investigation for possibly having passed inside information about the firm to Galleon boss Raj Rajaratnam.
The mere hint of this sort of thing is a disaster for Goldman (and Gupta). So, not surprisingly, Gupta is going to give up his seat on the Goldman board.
(Gupta is trying to spin the decision as the result of “other commitments,” but this sounds ludicrous under the circumstances.)
Gupta is also on the boards of Procter & Gamble and AMR (American Airlines’ parent). If the insider trading investigation continues to involve him, he will likely have to resign from those seats as well.
Gupta visited Galleon’s offices frequently, and investigators apparently have wire-tapped phone calls between him and Raj.
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