Ex-Goldman Sachs director Rajat Gupta guilty of fraud

Rajat Gupta, New York 14 June 2012
Image caption Rajat Gupta had served on the boards of Procter & Gamble and The Rockerfeller Foundation

A former Goldman Sachs board member has been found guilty of four criminal counts of insider trading by a federal court in New York.

Rajat Gupta, 63, denied illegally leaking boardroom secrets to Raj Rajaratnam, a former hedge fund manager now serving 11 years in prison.

The jury acquitted Gupta, a former managing partner of consulting giant McKinsey & Co, of two other charges.

Gupta could face up to 20 years in jail when he is sentenced on 18 October.

Prosecutors said that, in secret recordings of conversations with Rajaratnam, Gupta shared corporate secrets as though "he was talking about what happened at a Yankee game yesterday".

But defence lawyers told the jury that the use of phone records and FBI wiretaps only created the illusion of illegal business activities.

"That is a gambit that can bamboozle people into thinking something was proven when it wasn't," defence lawyer Gary Naftalis said.

The trial focused on a phone call made to Rajaratnam on 23 September 2008, minutes after Gupta had listened to a private conference call discussing a $5bn (£3.2bn) investment in Goldman Sachs by Warren Buffett's company Berkshire Hathaway. The deal would be made public after stock markets closed that day.

According to phone records, Rajaratnam bought $40m in Goldman Sachs stock moments after the phone call, earning nearly $1m.

Gupta, who was born in India and educated at Harvard, becomes the most prominent corporate figure to be convicted in a sweeping probe into insider trading. Experts say the conviction sends a message that no-one is off-limits.

He also served on the boards of Procter & Gamble, the Rockefeller Foundation and the Bill and Melinda Gates Foundation.