Washington, Oct 26 (IANS): Federal prosecutors are expected to file criminal charges Wednesday against Rajat K. Gupta, former Indian-American director of Goldman Sachs, in an insider trading case, according to the New York Times.
Gupta, 62, former head of prestigious international consultants McKinsey who also served on the board of Procter and Gamble, was expected to surrender today on criminal charges linked to the insider trading scandal centred on hedge fund magnate Raj Rajaratnam, the Times said citing unnamed sources.
The Times quoted a lawyer for Gupta as saying: "The facts demonstrate that Gupta is an innocent man and that he acted with honesty and integrity."
The contents of the charges was not yet public. However, Gupta has previously been investigated over whether he broke the law by tipping Rajaratnam, the founder of the Galleon Group hedge fund who this month was sentenced to 11 years in prison.
Prosecutors said Gupta tipped Rajaratnam about Warren Buffett's surprise $5 billion investment in Goldman Sachs during the financial crisis, allowing Rajaratnam to trade before the market knew of the news about the powerful company.
He also allegedly told Rajaratnam in advance that Goldman was about to post its first ever quarterly earnings loss, another major event on the market.
Gupta's name emerged just a week before Rajaratnam's trial in March, when the Securities and Exchange Commission filed an administrative proceeding against him.
The agency accused Gupta of passing confidential information about Goldman Sachs and Procter & Gamble to Rajaratnam, who then traded on the news.
At the time, federal prosecutors named Gupta a co-conspirator of Rajaratnam, but they never charged him.
He fought the SEC's civil action, which would have been heard before an administrative judge. arguing that the proceeding denied him of his constitutional right to a jury trial and treated him differently than the other Rajaratnam-related defendants.
Gupta prevailed, and the SEC dropped its case in August, but it maintained the right to bring an action in federal court.
The agency is expected to file a new, parallel civil case against Gupta as well, the Times said. It is unclear what has changed since the SEC dropped its case in August, it said.
In an interview Monday, Rajaratnam told Newsweek Daily Beast that US prosecutors pressed him to "wear a wire" and record conversations with Gupta to nail him and as late as two weeks before he was sentenced, he was still being asked by the government to turn on Gupta.