Rajat Gupta SEC Investigation

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04/03/2011 Rajat Gupta episode: How will it impact…
Fri, Mar 04, 2011 | Updated 06.52PM IST
4 MAR, 2011, 11.45AM IST,REUTERS
Rajat Gupta episode: How will it impact mighty McKinsey?

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NEW YORK: Can clients still trust the mighty McKinsey & Co? That's something they should be asking after the U.S. Securities and Exchange Commission, as
part of its insider trading crackdown, accused Rajat Gupta, the elite management consultancy's former chief, of betraying Goldman Sachs's secrets.
The quality of the private partnership's advice has always been fair game, though not often publicly. Jeffrey Immelt, the General Electric chief executive, told the New
York Times in December that the consulting firm offered costly dud advice in 2007, downplaying the risks of a financial crisis. But being wrong is a minor sin, and it's
not much of a figleaf for Immelt, either.
The Gupta charges are potentially much more damaging. The SEC alleges he leaked inside information on Goldman and Procter & Gamble, whose boards he sat
on, that netted the Galleon Group hedge fund , founded by the indicted Raj Rajaratnam , tens of millions of dollars. Gupta's lawyer denies the claims.
Gupta worked at McKinsey for 34 years until 2007 and the association continued thereafter. He was the firm's managing director, equivalent to its chief executive,
from 1993 to 2003. It seems fair to ask to what extent he became a product of the firm, or vice versa. Putting a generous spin on the SEC's detailed allegations,
Gupta enjoyed gossiping with his peers about what he was involved in -- even confidential matters.
For McKinsey clients, that's potentially even more alarming than the case of Anil Kumar, a former director of the firm, who pleaded guilty to fraud and conspiracy in
January last year in the same broad insider trading probe being conducted by US authorities. He admitted accepting $1.75 million to reveal secrets about clients to
Rajaratnam and knowing the information was being used for trading.
McKinsey's reputation rests on its ability to keep secrets. Consultancies, unlike investment banks, don't provide access to financial markets. All they offer is
counsel, which relies partly upon confidences revealed by their clients. According to McKinsey, "Our clients should never doubt that we will treat any information
they give us with absolute discretion." The allegations against Gupta make it hard for clients not to wonder.
The Securities and Exchange Commission has charged Rajat Gupta with leaking inside information on Warren Buffett's $5 billion investment in Goldman Sachs
during the financial crisis, the investment bank's results in two quarters in 2008, and Procter & Gamble's results in 2008. The alleged recipient of the information,
hedge fund manager Raj Rajaratnam, traded on the information.
Gupta worked at consulting firm McKinsey & Co from 1973 to 2007. He was its managing director from 1993 to 2003. He was a member of the board of
directors of Goldman Sachs and Procter & Gamble during the period in question. A lawyer for Gupta denied the claims.
Separately, McKinsey director Anil Kumar pleaded guilty in January 2010 to fraud and conspiracy. He said Rajaratnam paid him $1.75 million for inside information
on clients.
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UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION
SECURITIES ACT OF 1933

Release No. 9192 / March 1, 2011
SECURITIES EXCHANGE ACT OF 1934

INVESTMENT ADVISERS ACT OF 1940

INVESTMENT COMPANY ACT OF 1940

ADMINISTRATIVE PROCEEDING
File No. 3-14279
ORDER INSTITUTING PUBLIC

In the Matter of ADMINISTRATIVE AND CEASE-AND-
DESIST PROCEEDINGS PURSUANT
Rajat K. Gupta, TO SECTION 8A OF THE SECURITIES
ACT OF 1933, SECTIONS 15(b) AND
Respondent. 21C OF THE SECURITIES EXCHANGE
ACT OF 1934, SECTION 203(f) OF THE
INVESTMENT ADVISERS ACT OF
1940, AND SECTION 9(b) OF THE
INVESTMENT COMPANY ACT OF
1940
I.
The Securities and Exchange Commission (“Commission”) deems it appropriate

and in the public interest that public administrative and cease-and-desist proceedings be,
and hereby are, instituted pursuant to Section 8A of the Securities Act of 1933 (“Securities
Act”), Sections 15(b) and 21C of the Securities Exchange Act of 1934 (“Exchange Act”),
Section 203(f) of the Investment Advisers Act of 1940 (“Advisers Act”), and Section 9(b)
of the Investment Company Act of 1940 (“Investment Company Act”) against Rajat K.
Gupta (“Respondent” or “Gupta”).
II.
After an investigation, the Division of Enforcement alleges that:
A. SUMMARY
1. This matter concerns insider trading by Rajat K. Gupta (“Gupta”), who on a

number of occasions disclosed material nonpublic information that he obtained in the
course of his duties as a member of the Boards of Directors of The Goldman Sachs Group,
Inc. (“Goldman Sachs”) and The Procter & Gamble Company (“Procter & Gamble”) to Raj
Rajaratnam (“Rajaratnam”), the founder and a Managing General Partner of the hedge fund
investment adviser Galleon Management, LP (“Galleon”). Rajaratnam, in turn, either
caused the Galleon hedge funds that he managed to trade based on the material nonpublic
information, or passed the information on to others at Galleon and caused trades based on
the information.
2. Specifically, Gupta disclosed to Rajaratnam material nonpublic information

concerning Berkshire Hathaway Inc’s (“Berkshire”) $5 billion investment in Goldman
Sachs before it was publicly announced on September 23, 2008, as well as Goldman
Sachs’s financial results for both the second and fourth quarters of 2008. Rajaratnam
caused the various Galleon hedge funds that he managed to trade based on the material
nonpublic information, generating illicit profits and loss avoidance of more than $17
million. In addition, Gupta disclosed to Rajaratnam material nonpublic information
concerning Procter & Gamble’s financial results for the quarter ending December 2008.
Rajaratnam relayed this information to others at Galleon, who caused Galleon funds to
trade based on the information, generating illicit profits of over $570,000.
3. In the course of carrying out the insider trading scheme, Rajaratnam

informed certain conspirators that he obtained nonpublic information concerning Goldman
Sachs from his source on the company’s Board. Rajaratnam informed at least one other
conspirator that he obtained nonpublic information concerning Procter & Gamble from his
source on Procter & Gamble’s Board. As set forth below, Gupta was Rajaratnam’s source
on both companies’ Boards and knowingly or recklessly disclosed material nonpublic
information to Rajaratnam for use in trading activities.
4. During the relevant period, Gupta had a variety of business dealings with
Rajaratnam and stood to benefit from his relationship with Rajaratnam. In addition, Gupta
was an investor in, and a director of, Galleon’s GB Voyager Multi-Strategy Fund SPC,
Ltd., a master fund with assets that were invested in numerous Galleon hedge funds,
including those that traded based on Gupta’s illegal tips.
5. By virtue of his conduct, Gupta willfully violated Section 17(a) of the

Securities Act, and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.
B. RESPONDENT
6. Gupta, age 62, resides in Westport, Connecticut. From November 2006

through May 2010, Gupta was a member of Goldman Sachs’s Board of Directors. During
his tenure on Goldman Sachs’s Board, Gupta served as a member of the Board’s Audit
Committee, Corporate Governance and Nominating Committee, and Compensation
Committee. Since 2007, Gupta has also been a member of Procter & Gamble’s Board of
Directors, and has served on the Board’s Audit Committee and its Innovation and
Technology Committee. Gupta serves on the Boards of Directors of several other public
companies and is affiliated with other entities, both public and private. Gupta is a
Founding Partner and the Chairman of New Silk Route Partners LLC, an investment firm
that was originally called Taj Capital Partners and was founded by Gupta, Rajaratnam, and
others in 2006. Gupta holds a Bachelor of Technology degree in mechanical engineering
from the Indian Institute of Technology and an MBA from Harvard Business School.
C. OTHER RELEVANT ENTITIES
7. Berkshire is a Delaware corporation headquartered in Omaha, Nebraska.

Berkshire is a holding company that owns subsidiaries engaged in many business activities.
Berkshire’s securities are registered with the Commission pursuant to Section 12(b) of the
Exchange Act, and its stock trades on the New York Stock Exchange (“NYSE”) under the
symbols “BRK-A” for its Class A shares, and “BRK-B” for its Class B shares.
8. Galleon, a Delaware limited partnership, is a hedge fund investment adviser

based in New York, New York. As of March 2009, Galleon had over $2.6 billion under
management. Galleon was founded in 1997 and registered with the Commission as an
investment adviser in January 2006. In the wake of the October 16, 2009, insider trading
arrest of Rajaratnam, Galleon began to liquidate itself and the hedge funds it advised.
During the relevant period, Galleon served as the investment adviser for several hedge
funds, including Technology Offshore Fund, Technology Partners Fund, Technology MAC
Fund, and the Diversified Fund (collectively, the “Galleon Tech funds”).
9. Goldman Sachs is a Delaware corporation headquartered in New York,

New York. Goldman Sachs is a global investment banking, securities, and investment
management firm that provides financial services to a client base that includes
corporations, financial institutions, governments, and high-net-worth individuals and has a
substantial broker-dealer operation. The subsidiaries of Goldman Sachs include broker-
dealers and investment advisers registered with the Commission. Goldman’s securities are
registered with the Commission pursuant to Section 12(b) of the Exchange Act and its
stock trades on the NYSE under the symbol “GS.”
10. Procter & Gamble is an Ohio corporation headquartered in Cincinnati,

Ohio. Procter & Gamble is a provider of branded consumer goods products in over 180
countries around the world. Procter & Gamble’s securities are registered with the
Commission pursuant to Section 12(b) of the Exchange Act and its stock trades on the
NYSE under the symbol “PG.”
11. Rajaratnam, age 53, resides in New York, New York. Rajaratnam is the
founder and a Managing General Partner of Galleon, and, during the relevant period,
served as Portfolio Manager of the Galleon Tech funds. Prior to founding Galleon,
Rajaratnam worked at Needham & Co., a registered broker-dealer, for 11 years, at which
time he held Series 7 and Series 24 securities licenses. Rajaratnam obtained a degree from
the University of Sussex, England, in 1980, and an MBA in Finance from the Wharton
School of the University of Pennsylvania in 1983.
D. ALLEGATIONS
Gupta Disclosed Material Nonpublic Information to Rajaratnam Concerning
Berkshire’s $5 Billion Investment in Goldman Sachs
12. In September 2008, Gupta disclosed to Rajaratnam material nonpublic

information he learned as a member of the Goldman Sachs Board of Directors concerning,
among other things, Berkshire’s $5 billion investment in Goldman Sachs, which was
publicly announced on September 23, 2008. Rajaratnam, in turn, caused the Galleon Tech
funds to trade based on the material nonpublic information that Gupta disclosed.
13. Soon after the bankruptcy filing of Lehman Brothers Holdings Inc.
(“Lehman”) on September 15, 2008 —which sent the financial markets into an
unprecedented tailspin — senior management of Goldman Sachs began considering
various strategic alternatives as they tried to navigate through the ongoing financial crisis.
These alternatives included a potential investment from an institutional investor like
Berkshire, and were variously discussed at Goldman Sachs Board meetings and posting
calls during the week and a half following Lehman’s bankruptcy filing.
14. Goldman Sachs executives continued to explore various strategic

alternatives the weekend after the Lehman bankruptcy. The Goldman Sachs Board
convened a Special Meeting on Sunday, September 21, 2008. During that meeting, which
Gupta attended via teleconference, the Board approved Goldman Sachs becoming a Bank
Holding Company. The Goldman Sachs Board was also updated on certain strategic
alternatives that had been considered over the weekend.
15. Goldman Sachs CEO Lloyd Blankfein (“Blankfein”) had a long-standing

practice of informing the Board during posting calls, meetings and phone calls about the
then-current financial status of the firm. Goldman’s net revenues had been particularly
strong in the week leading up to the meeting – despite the fact that the week had begun
with Lehman’s bankruptcy and that the financial markets were in a general state of turmoil.
While the Board’s determination to convert Goldman Sachs into a Bank Holding Company
was publicly disclosed on the evening of September 21, information concerning Goldman
Sachs’s strategic alternatives and strong net revenue remained confidential.
16. Telephone records and calendar entries indicate that, on the morning of
Monday, September 22 — the day after the Sunday evening Goldman Sachs Board
meeting — Gupta and Rajaratnam very likely had a telephone conversation. Shortly after
that conversation, Rajaratnam caused the Galleon Tech funds, which held no preexisting
long or short position in Goldman Sachs securities at the time, to purchase over 80,000
Goldman Sachs shares.
17. On the morning of September 23, Rajaratnam placed a call to Gupta which
lasted over 14 minutes. Less than a minute after the call began, Rajaratnam caused the
Galleon Tech funds to purchase more than 40,000 additional Goldman Sachs shares.
18. A Special Telephonic Meeting of the Goldman Sachs Board was convened
at 3:15 p.m. on September 23, during which the Board considered and approved a $5
billion preferred stock investment by Berkshire in Goldman Sachs and a public equity
offering. As Gupta knew, Berkshire was one of the most respected and influential
investors and its decision to make such a large investment in Goldman Sachs would likely
be viewed as a strong vote of confidence in the firm when the information was disclosed to
the public. The infusion of a large amount of new capital in the firm also would likely be
viewed favorably by investors. Gupta participated in the Board meeting telephonically,
staying connected to the call until approximately 3:53 p.m. Immediately after
disconnecting from the Board call, Gupta called Rajaratnam from the same line. Within a
minute after this telephone conversation, at 3:56 p.m. and 3:57 p.m., and just minutes
before the close of the markets, Rajaratnam caused the Galleon Tech funds to purchase
more than 175,000 additional Goldman Sachs shares. Rajaratnam later informed a
conspirator that he received the information upon which he placed the trades minutes
before the close.
19. Goldman Sachs publicly announced the Berkshire investment, along with a
$2.5 billion public stock offering, after the market close on September 23. Goldman
Sachs’s stock price, which had closed at $125.05 per share on September 23, opened at
$128.44 per share the following day and rose to a closing price that day of $133.00 per
share, a gain of 6.36% from the prior day’s closing price.
20. On September 24, Rajaratnam caused the Galleon Tech funds to liquidate
the long position they had built on September 23, generating profits of over $900,000.
Goldman Sachs’s Financial Results for the Fourth Quarter of 2008
21. Gupta also disclosed material nonpublic information that he learned during
a Goldman Sachs Board posting call about Goldman Sachs’s financial results for the fourth
quarter of 2008 to Rajaratnam, who caused the Galleon funds he managed to trade based on
the information.
22. Goldman Sachs announced negative results for the fourth quarter of 2008
on December 16, 2008, reporting a $2.1 billion loss, its first (and only) quarterly loss as a
publicly traded company.
23. Blankfein began to appreciate very early in the quarter that results were
going to be poor. About mid-quarter, on October 23, 2008 at 4:15 p.m., Blankfein,
Goldman Sachs Chief Financial Officer David Viniar (“Viniar”), and other senior
executives at Goldman Sachs conducted a Board posting call during which they informed
the Board of the company’s then-current financial situation. The daily and weekly profit
and loss statements that Blankfein and Viniar would typically rely on as the basis for their
presentations to the Board show that the company was then operating at a quarter to date
loss of $1.96 per share at the time.
24. Gupta dialed into the October 23, 2008, Board meeting around the time it
was scheduled to start and remained on the call until 4:49 p.m. Just 23 seconds after
disconnecting from the call, Gupta called Rajaratnam. The call lasted approximately 13
minutes. The following morning, just as the financial markets opened at 9:30 a.m.,
Rajaratnam caused the Galleon Tech funds to begin selling their holdings of Goldman
Sachs stock. The funds finished selling off their holdings — which had consisted of over
120,000 shares — that same day at prices ranging from $97.74 to $102.17 per share. The
same day (October 24, 2008), in discussing trading and market information with another
participant in the trading scheme, Rajaratnam explained that Wall Street expects Goldman
Sachs to earn $2.50 per share but that Rajaratnam had heard the prior day from a member
of the Goldman Sachs Board that the company was actually going to lose $2 per share. As
a result of Rajaratnam’s trades based on the material nonpublic information that Gupta
provided, the Galleon Tech funds avoided losses of over $3 million.
Goldman Sachs’s Financial Results for the Second Quarter of 2008
25. Gupta also disclosed to Rajaratnam material nonpublic information

concerning Goldman Sachs’s positive financial results for the second quarter of 2008,
which were publicly announced on June 17, 2008. Rajaratnam caused the Galleon funds he
managed to trade based on the information.
26. Approximately one week before the announcement, on June 10, 2008, at
5:41 p.m., Blankfein placed a call to Gupta that lasted more than 8 minutes. The call was
one of several Blankfein made to various Goldman Sachs outside directors around the same
time that evening. Blankfein’s practice was to apprise Directors of the then-current
financial status of the firm when he spoke to them.
27. Goldman Sachs’s second quarter of 2008 had ended on May 30, 2008. By
June 10, 2008, Goldman Sachs’s financial reporting team had already compiled and
analyzed the quarterly financial data and put together a draft earnings press release that had
been circulated to various finance personnel, including Viniar, prior to Blankfein’s call
with Gupta. The company’s financial performance was strong in an extremely difficult
environment, and significantly better than analyst consensus estimates.
28. Blankfein knew the earnings numbers (which were positive) and discussed
them with Gupta during their June 10, 2008, telephone conversation.
29. On the night of June 10, 2008, at 9:24 p.m., Gupta placed a short call to
Rajaratnam’s home. The call was the first in a flurry of short calls between the two over an
18-minute span that night, which culminated in a 4-minute call from Rajaratnam to Gupta,
at 9:42 p.m. On the following morning, June 11, at 8:43 a.m., Rajaratnam placed another
call to Gupta that lasted about 2.5 minutes. Beginning at 9:35 a.m., minutes after the
markets opened, Rajaratnam caused the Galleon Tech funds to significantly increase an
existing long position it had established in Goldman Sachs shares by purchasing over 5,500
Goldman Sachs June $170 call option contracts (Goldman Sachs’s share price had opened
at $167.00 per share on June 11).
30. Rajaratnam also caused the Galleon Tech funds to purchase over 350,000
additional Goldman Sachs shares on June 11 and 12, selling only a small portion on June
13.
31. On June 16, after a positive Goldman Sachs earnings preview was issued
sending Goldman Sachs’s stock price up more than 2%, Rajaratnam caused the Galleon
Tech funds to sell the June $170 call option contracts they had purchased on June 11,
generating profits of approximately $7 million.
32. On June 17, prior to market open, Goldman Sachs announced its quarterly
results. Revenues and earnings per share beat analysts’ estimates, and Goldman Sachs’s
share price opened the day at $185.04 per share — about 1.62% higher than the prior day’s
closing price of $182.09 per share. After the announcement, Rajaratnam caused the
Galleon Tech funds to sell the Goldman Sachs shares they had purchased after Rajaratnam
received the material nonpublic information from Gupta on June 10, generating profits of
over $6.6 million.
33. The total illicit profits made by the Galleon Tech funds by virtue of their
trading based on Gupta’s material nonpublic information concerning Goldman Sachs’s
second quarter of 2008 results exceeded $13.6 million.
Gupta Disclosed Material Nonpublic Information to Rajaratnam Concerning Procter

& Gamble’s Financial Results for the Quarter Ending December 2008
34. Gupta also disclosed to Rajaratnam material nonpublic information that

Gupta learned as a member of Procter & Gamble’s Board of Directors about Procter &
Gamble’s financial results for the October through December 2008 quarter. Rajaratnam
then passed the material nonpublic information to his Galleon colleagues, who then caused
Galleon funds to trade based on the information.
35. At 9:00 a.m. on January 29, 2009, the day before Procter & Gamble’s pre-
market quarterly earnings release was issued, Procter & Gamble’s Audit Committee, of
which Gupta was a member, met telephonically to discuss the planned release. Gupta
dialed into the Audit Committee meeting at its scheduled start time and remained on the
call for over 19 minutes. A draft of the earnings release, which had been mailed to Gupta
and the other committee members two days before the meeting, stated, among other things,
that the company expected organic sales, or sales related to preexisting rather than newly
acquired business segments, to grow 2-5% in the fiscal year. This compared negatively to
the 4-6% growth the company had previously publicly predicted.
36. Gupta called Rajaratnam in the early afternoon on January 29, 2009.
Shortly afterwards, Rajaratnam advised another participant in the insider trading conspiracy
that he had learned from a contact on Procter & Gamble’s Board that the company’s
organic sales growth would be lower than expected. In the late afternoon of January 29,
2009, Galleon funds sold short approximately 180,000 Procter & Gamble shares. After
Procter & Gamble issued its earnings release in the pre-market on January 30 (the actual
release was substantially the same as the draft release Gupta had been provided), Procter &
Gamble’s stock price, which had closed at $58.22 per share on January 29, opened on
January 30 at $56.50 per share. The stock price declined further to $54.50 per share by the
close on January 30, down approximately 6.39% from the prior day’s closing price.
37. By virtue of their trades, which were based on the material nonpublic
information that Gupta provided to Rajaratnam, the Galleon funds generated illicit profits
of over $570,000.
Gupta’s Fiduciary Duty to Keep Confidential All Material, Nonpublic Information

about Goldman Sachs
38. As a Goldman Sachs Director, Gupta had a duty to keep confidential all
material, nonpublic information about Goldman Sachs.
39. Goldman Sachs’s Corporate Governance Guidelines in effect and applicable

to Gupta during the relevant period provided that the proceedings and deliberations of the
Board and its committees were confidential. Moreover, non-employee directors such as
Gupta were prohibited from speaking on behalf of the company without consulting the
Chief Executive Officer.
Gupta’s Fiduciary Duty to Keep Confidential All Material, Nonpublic Information

about Procter & Gamble
40. As a Procter & Gamble Director, Gupta had a duty to keep confidential all
material, nonpublic information about Procter & Gamble.
41. Procter & Gamble’s insider trading policy in effect and applicable to Gupta
during the relevant period prohibits him from trading while in possession of material
nonpublic information concerning Procter & Gamble, or from conveying that information
to others, and specifically prohibits use or disclosure of information included in draft
earnings reports as subject to the policies’ strictures.
E. VIOLATIONS
42. As a result of the conduct described above, Gupta willfully violated Section
17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5
thereunder, which prohibit fraudulent conduct in the offer and sale of securities and in
connection with the purchase or sale of securities.
III.
In view of the allegations made by the Division of Enforcement, the Commission

deems it necessary and appropriate in the public interest that public administrative and
cease-and-desist proceedings be instituted to determine:
A. Whether the allegations set forth in Section II hereof are true and, in
connection therewith, to afford Respondent an opportunity to establish any defenses to such
allegations;
B. What, if any, remedial action is appropriate in the public interest against

Respondent pursuant to Section 15(b) of the Exchange Act including, but not limited to,
disgorgement and civil penalties pursuant to Section 21B of the Exchange Act;
C. What, if any, remedial action is appropriate in the public interest against

Respondent pursuant to Section 203(f) of the Advisers Act including, but not limited to,
civil penalties pursuant to Section 203(i) of the Advisers Act;
D. What, if any, remedial action is appropriate in the public interest against

Respondent pursuant to Section 9(b) of the Investment Company Act including, but not
limited to, civil penalties pursuant to Section 9(d) of the Investment Company Act; and
E. Whether, pursuant to Section 8A of the Securities Act and Section 21C of

the Exchange Act, Respondent should be ordered to cease and desist from committing or
causing violations or future violations of Section 17(a) of the Securities Act and Section
10(b) of the Exchange Act and Rule 10b-5 thereunder; whether Respondent should be
ordered to pay disgorgement pursuant to Section 8A(e) of the Securities Act and Section
21C(e) of the Exchange Act and penalties pursuant to Section 8A(g) of the Securities Act
and Section 21B(a)(2) of the Exchange Act; and whether other appropriate relief should be
granted in the public interest, including a prohibition from service as an officer or director
of any issuer pursuant to Section 8A(f) of the Securities Act and Section 21C(f) of the
Exchange Act.
IV.
IT IS ORDERED that a public hearing for the purpose of taking evidence on the
questions set forth in Section III hereof shall be convened not earlier than 30 days and not
later than 60 days from service of this Order at a time and place to be fixed, and before an
Administrative Law Judge to be designated by further order as provided by Rule 110 of the
Commission's Rules of Practice, 17 C.F.R. § 201.110.
IT IS FURTHER ORDERED that Respondent shall file an Answer to the allegations

contained in this Order within twenty (20) days after service of this Order, as provided by
Rule 220 of the Commission’s Rules of Practice, 17 C.F.R. § 201.220.
If Respondent fails to file the directed answer, or fails to appear at a hearing after
being duly notified, the Respondent may be deemed in default and the proceedings may be
determined against him upon consideration of this Order, the allegations of which may be
deemed to be true as provided by Rules 155(a), 220(f), 221(f) and 310 of the Commission’s
Rules of Practice, 17 C.F.R. §§ 201.155(a), 201.220(f), 201.221(f) and 201.310.
This Order shall be served forthwith upon Respondent personally or by certified

mail.
IT IS FURTHER ORDERED that the Administrative Law Judge shall issue an

initial decision no later than 300 days from the date of service of this Order, pursuant to
Rule 360(a)(2) of the Commission’s Rules of Practice.
In the absence of an appropriate waiver, no officer or employee of the Commission

engaged in the performance of investigative or prosecuting functions in this or any factually
related proceeding will be permitted to participate or advise in the decision of this matter,
except as witness or counsel in proceedings held pursuant to notice. Since this proceeding is
not “rule making” within the meaning of Section 551 of the Administrative Procedure Act, it
is not deemed subject to the provisions of Section 553 delaying the effective date of any
final Commission action.
By the Commission.
Elizabeth M. Murphy
Secretary
10
04/03/2011 Charges against Rajat Gupta baseless: …
2 MAR, 2011, 10.26AM IST,PTI
Charges against Rajat Gupta baseless: Counsel

Homepage!
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Washington: Indian-American Rajat Gupta , former board member of Goldman Sachs and Proctor and Gamble, has rubbished charges of insider trading against him
as "baseless" with his lawyer asserting that his conduct and integrity were "beyond reproach".
"The SEC's allegations are totally baseless," Gary Naftalis, Counsel for Gupta, said in a statement to PTI.
"Mr Gupta's 40-year record of ethical conduct, integrity, and commitment to guarding his clients' confidences is beyond reproach," he said.
Naftalis said Gupta has done nothing wrong and is confident that the "unfounded allegations" will be rejected by any fair and impartial fact finder.
"There is no allegation that Mr Gupta traded in any of these securities or shared in any profits as part of any quid pro quo," he wrote.
"In fact, Mr Gupta had lost his entire $10 million investment in the GB Voyager Fund managed by Rajaratnam at the time of these events, negating any motive to
deviate from a lifetime of honesty and integrity," Naftalis said in defence of his client.
Naftalis' comment came hours after the SEC accused Gupta of illegally tipping Galleon Management founder and hedge fund manager Raj Rajaratnam with inside
information about the quarterly earnings at both firms as well as an impending $5 billion investment by Berkshire Hathaway in Goldman.
SEC alleges that Gupta, a friend and business associate of Rajaratnam, provided him with confidential information learned during board calls and in other aspects of
his duties on the Goldman and P&G boards.
Rajaratnam used the inside information to trade on behalf of some of Galleon's hedge funds, or shared the information with others at his firm who then traded on it
ahead of public announcements by the firms, it said.
The insider trading by Rajaratnam and others generated more than $18 million in illicit profits and loss avoidance.
Gupta was at the time a direct or indirect investor in at least some of these Galleon hedge funds, and had other potentially lucrative business interests with
Rajaratnam, SEC said.
The Indian-American was honored with the highest trust of leading public companies, and he betrayed that trust by disclosing their most sensitive and valuable
secrets, Robert Khuzami, Director of the SEC's Division of Enforcement, said.
"Directors who violate the sanctity of board room confidences for private gain will be held to account for their illegal actions," he said.
SEC alleges that while a member of Goldman's Board of Directors, Gupta tipped Rajaratnam about Berkshire Hathaway's $5 billion investment in Goldman and
Goldman's upcoming public equity offering before that information was publicly announced on September 23, 2008.
Gupta called Rajaratnam immediately after a special telephonic meeting at which Goldman's Board considered and approved Berkshire's investment in Goldman
Sachs and the public equity offering.
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04/03/2011 Charges against Rajat Gupta baseless: …
04/03/2011 Ex-McKinsey head Rajat Gupta says US …
3 MAR, 2011, 01.06PM IST,ET BUREAU
Ex-McKinsey head Rajat Gupta says US regulator's allegations 'baseless'

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HYDERABAD: Rajat Gupta, the former Indian head of McKinsey and a well-known advisor to many American CEOs, on Wednesday rubbished charges by the US
markets regulator that he passed on inside information that helped a hedge fund manager illegally profit from Warren Buffett’s $5-billion investment in Goldman
Sachs at the height of the 2008 market meltdown.
“I am stunned and shocked by the proposed action. Let me assure you, I have done nothing wrong. The SEC’s allegations are totally baseless,” Gupta wrote in a
confidential email to the board members of the Indian School of Business, or ISB. “I am informed by my lawyers that the case is based on speculation and
unreliable third-hand hearsay,” Gupta, who is chairman of the ISB board, said. A copy of the email is with ET.
The US Securities and Exchange Commission (SEC) on Tuesday slapped insider trading charges against Gupta in a case involving the sudden spike in shares of
Goldman Sachs in September 2008, a few hours before it announced an investment from Buffett.
Gupta said he has spent his entire professional career zealously guarding the confidence of his clients. “There is no reason for me to suddenly deviate from a
lifetime of probity and honor. I will defend myself vigorously and I am confident of being vindicated,” he said in the mail.
ISB Stands by Gupta
An eight-member jury of top-flight CEOs in India awarded Rajat Gupta with the Global Indian Award at The Economic Times Awards for Corporate Excellence in
2007.
According to SEC , Gupta leaked secret details of Buffett’s $5-billion investment to Galleon Group hedge fund manager Raj Rajaratnam just minutes after the
Goldman board meet got over. Rajaratnam, who is also being investigated, allegedly bought 175,000 shares of Goldman immediately after Gupta’s call and just
minutes before the markets closed. Goldman made the announcement at 6 pm that day. The next day, Rajaratnam sold the shares for a $900,000 profit.
A Reuters report the next day noted the unusual movement in Goldman shares in the last 10 minutes of trade. The shares rose from $119.53 at 3:50 pm to $125.05
at close. The S&P financials sub-index fell in the same time frame, the report said.
A separate statement from Gupta’s counsel also lashed out at SEC. “Mr Gupta’s 40-year record of ethical conduct, integrity and commitment to guarding his
clients’ confidence is beyond reproach. Mr Gupta has done nothing wrong and is confident that these unfounded allegations will be rejected by any fair and impartial
fact finder. There is no allegation that Mr Gupta traded in any of these securities or shared in any profits as part of any quid pro quo. In fact Mr Gupta lost his entire
$10 million investment in the GB Voyager Fund managed by Rajaratnam at the time of these events, negating any motive to deviate from a lifetime of honesty and
integrity,” the statement said.
Gupta is one of the founder members of the ISB. The school’s 33-member executive board of the school include Anil Ambani of ADAG, Rahul Bajaj of Bajaj Auto,
Lakshmi Mittal of Arcelor Mittal, GV Prasad of Dr Reddy’s, Chanda Kochhar of ICICI Bank , Adi Godrej of Godrej Group, and Deepak Parekh of HDFC.
On Wednesday, ISB said Gupta will continue to be its chairman.
``We note that the US Securities and Exchange Commission (SEC) has initiated administrative and civil proceedings against our chairman, Rajat Gupta. We also
note the statement of the counsel for Rajat Gupta, which asserts that the allegations are totally baseless. The ISB community is confident that Rajat Gupta will be
vindicated. He continues to be the chairman of the ISB executive board,” a statement from ISB said.
ET tried to reach at least seven board members of ISB, but none of them was willing to talk on the matter. ``I don’t know anything about the charges faced by Gupta
in the US. It is for the ISB and the dean to offer any comments,” said Bajaj.
GV Prasad, vice-chairman & CEO of DRL, also said he would not comment.
Galleon has already claimed one Indian victim, a former ISB executive board member and director at McKinsey who was charged in October 2009. He subsequently
sought leave of absence from the board `until he sorted the matter out.’
Before that in January 2009, the then ISB dean, M Rammohan Rao, resigned following his controversial role as a board member of fraud-tainted Satyam Computer
Services . In December 2008, Satyam made an attempt to buy construction firms Maytas Infra and Maytas Properties, owned by its then promoter B Ramalinga
Raju’ s family in an effort to save the company. The decision was announced after a board meeting attended by Rao, among others. However, the bid couldn’t fell
through over investor fury and later Raju admitted to cooking Satyam’s account books and inflating revenues.
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04/03/2011 Ex-McKinsey head Rajat Gupta says US …
04/03/2011 Galleon muck leaves stain on Rajat Gu…
16 APR, 2010, 01.13AM IST, SUDESHNA SEN,ET BUREAU
Galleon muck leaves stain on Rajat Gupta
LONDON: Goldman Sachs Group director and former McKinsey head Rajat Gupta seems to have been dragged into the mire of one of the biggest investigations into
the widespread insider trading ring run by Galleon Group founder Raj Rajaratnam .
Citing unnamed sources, The Wall Street Journal reported on Thursday that US federal prosecutors are ‘examining’ whether Rajat Gupta shared insider information
with the hedge fund. Speaking from New York, his spokesperson said, “Mr Gupta is unaware of any examination of any such issue and has done nothing wrong.”
Mr Gupta has for long been a role model for Indian corporates and an activist promoter of Indian interests in the US and overseas. Mr Gupta is chairman of private
equity firm New Silk Route and is active in many non-profit organizations.
He appears to have been implicated because of his ties with ex-colleague Anil Kumar , a former McKinsey consultant, who pleaded guilty to sharing insider
information in return for $2 million. Mr Kumar is not the only prominent overseas Indian involved in the case: Rajiv Goel of Intel has also pleaded guilty in the case in
which 21 people have so far been charged.
The WSJ report clarified that there is no investigation or any other allegation against Mr Gupta, nor any indication that his own stock trades are under scrutiny. Mr
Gupta is a board member of Goldman Sachs, one of the companies whose stocks prosecutors have said were targets of Galleon, along with AT&T and Cisco
Systems . The US government is scrutinising the activities in the Goldman stock between June and October 2008, when Lehman Brothers was collapsing.
Mr Rajaratnam has been charged with running one of the largest insider trading rings in recent times. Total profits from the scheme amounted to $20 million. Mr
Gupta is believed to be a close associate of both Mr Kumar and Mr Rajaratnam, and according to the report, had a separate private equity partnership with Mr
Rajaratnam several years ago.
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04/03/2011 India Inc backs Rajat Gupta - The Econ…
4 MAR, 2011, 05.38AM IST,TNN
India Inc backs Rajat Gupta

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MUMBAI/NEW DELHI: India Inc has come out in full support of Rajat Gupta, the former managing director of McKinsey, who has been indicted for insider trading by
the United States Securities and Exchange Commission (SEC).
Even as the case throws the spotlight back on possible gaps in corporate governance practices, given that a charge of this nature has been levied on a person of the
stature of Rajat Gupta, captains of Indian industry feel he will be vindicated. “I know Rajat Gupta very well. I am confident he will be vindicated . His record and
reputation are impeccable,” Adi Godrej, chairman, Godrej Group , told TOI.
“I’ve known him for many years—professionally and personally. I’ve also spent a lot of time with him through various social ventures . There cannot be an issue of
governance where he is concerned,” said Ajay Piramal , chairman, Piramal Group , who said he had no doubt that Gupta will be able to defend himself and be
vindicated. Gupta is also on the board of the NGO “Pratham” , where Piramal is the chairman.
Besides, Gupta is also the chairman of the Indian School of Business (ISB). Rahul Bajaj, one of the board members of the ISB, said that the board will take a call
on the Rajat Gupta issue in a meeting on April 2. “I stand by the statement of the ISB that says that Gupta continues to be the chairman of the board. I cannot say
anything more on the matter now,” Bajaj said.
“For all the good he’s done, he deserves to benefit from the principle of innocent till proven otherwise,” tweeted Anand Mahindra , VC & MD, Mahindra Group .
“It is difficult to imagine somebody like Gupta will do something which will betray the trust of the board and shareholders, and violate the sanctity of the boardroom ,”
said Pratip Kar , member, advisory council, Global Corporate Governance Forum of IFC (a World Bank arm). According to Kar, since the enforcement department of
the US SEC is initiating certain proceedings , including cease and desist proceedings, to determine the kind of remedial and civil penalty that need to be pursued
against Gupta, the present order of the department also affords the respondent an opportunity to establish his defense against the allegations.
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04/03/2011 Rajat Gupta and Rajaratnam have 'old' …
7 MAY, 2010, 04.09AM IST,BLOOMBERG
Rajat Gupta and Rajaratnam have 'old' business links

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NEW DELHI/ATLANTA/WASHINGTON: Rajat Gupta, the Goldman Sachs Group director who is being investigated by US authorities over his links to Galleon Group
founder Raj Rajaratnam , had a long-standing business relationship with the billionaire hedge fund manager. Interviews, public records, lawsuits and regulatory filings
show a 13-year history of co-investing and other business collaborations between Gupta, 61, the former worldwide head of consulting firm McKinsey & Co , and
Rajaratnam, 52, the central figure in the Galleon insider trading probe.
Rajaratnam has a stake in a fund managed by New Silk Route NSR Partners , founded by Gupta and three others in 2006 to invest in South Asian companies,
according to a New Silk Route spokeswoman. The fund owns stakes in at least 11 Indian companies, including cell phone tower operator Reliance Infratel and the
Cafe Coffee Day chain. “Mr Rajaratnam has had a well-known relationship with Mr Gupta for many years, and it is one that he is both proud and fond of,”
Rajaratnam’s spokesman, Jim McCarthy , said in a statement.
“Their association as investors has led to many successful ventures around the world and made a large and positive impact for a long list of worthy businesses and
charities. But just as important, they have always conducted those efforts with integrity and diligent attention to sound, ethical practices.”
Rajaratnam, who was arrested October 16, is fighting criminal charges and US Securities and Exchange Commission civil claims that he used inside information to
trade shares of companies including Advanced Micro Devices . He denies any wrongdoing. US investigators are examining whether Gupta tipped off Rajaratnam to a
$5-billion investment in Goldman Sachs by Warren Buffett’s Berkshire Hathaway , a person with direct knowledge of the inquiry said April 23.
“In any insider trading investigation, prosecutors will be looking at relationships to try to determine if any improper information was passed between them,” said
Robert Mintz , a former federal prosecutor in New Jersey who is a partner with McCarter & English. “The nature of the relationship, the length of the relationship, the
frequency of contact and the subsequent investing strategy are all areas that are likely to be scrutinised.”
Gupta, who earned an MBA at Harvard Business School , serves on the boards of American Airlines parent AMR , Procter & Gamble , Harman International
Industries , Genpact , the business outsourcing company, and Russia’s Sberbank . Gupta announced earlier this year he would not seek re-election to the Goldman
Sachs board.
Gupta’s attorney, Gary Naftalis of Kramer, Levin, Naftalis & Frankel , denied that his client had done anything wrong.
“During the course of his long career, Rajat Gupta has been involved with many business dealings and philanthropic activities,” he said in a May 4 statement. “In all
his activities, he has always conducted himself with unquestioned integrity.”
Gupta and Rajaratnam have ties through Indian business organizations. In 2005, they were speakers at an Indian Institute of Technology conference. The two men
and their wives, Anita and Asha, attended galas staged by the American India Foundation , on whose council of trustees both served. In May 2009, they were
among the “creme de la creme crowd” that dined on Tandoori lamb chops, raising $1.5 million for charity in an auction while honoring KKR co-founder Henry Kravis ,
according to Indian-American society website Lassi With Lavina.
In 1997, Gupta and Rajaratnam were both looking for personal investments, and when the venture-capital firm TeleSoft Partners LP of Foster City, California, sought
limited partners, both men seized the opportunity. By the end of 1998, Gupta’s position was worth $213,570 and Rajaratnam’s $86,451, according to documents
filed as part of a lawsuit.
In early 2006, Gupta and Rajaratnam joined Mark Schwartz , the former chairman of Goldman Sachs, and Parag Saxena , the former chief executive officer of
Invesco Private Capital, to start a blended hedge fund and private equity company called Taj Capital Partners Asia Fund LP. They planned to hire a 50-person team
to invest about $2 billion in India and neighboring countries, according to an investor prospectus.
By December 2006, plans had changed: The fund was renamed New Silk Route, the hedge fund was dropped and the fund size reduced to $1.34 billion, according
to documents filed with the SEC in October 2008. While Rajaratnam was not a principal in New Silk Route, he took a stake that by October 30, 2009, was “much
less than 5%,” said the New Silk Route spokeswoman.
Rajaratnam also created a fund merging the Galleon and New Silk names, called the Galleon International Master Fund SPC-New Silk Route Pipe Segregated
Portfolio. The SEC filings don’t reveal whether Gupta or New Silk Route were involved in the fund. A Gupta spokesman declined to comment.
Still, in one case, the principals at Gupta’s New Silk Route brought an investment opportunity to Rajaratnam’s fund after passing on it themselves, according to a
person familiar with the transaction. The opportunity was a stake in Firstsource Solutions , a Mumbai-based outsourcing firm that was about to go public.
Rajaratnam’s fund went on to accumulate a 4.86% stake, according to FirstSource’s 2009 annual report.
In early 2007, New Silk Route and Galleon International Master Fund SPC bought stakes of less than 1% in Reliance Infratel in a single share agreement executed
July 30, 2007, according to a prospectus the company filed with Deutsche Bank. Reliance Infratel, a cell phone tower operator, is part of Reliance Communications ,
one of India’s largest mobile phone companies.
When Gupta and his partners launched New Silk Route in 2006, they had $1.2 billion to invest after paying salaries to themselves and staff, according to SEC
04/03/2011 Rajat Gupta and Rajaratnam have 'old' …
filings.
In 2007, Gupta and his partners found five companies in India to invest in — with investments ranging from the $21 million investment in Reliance Infratel to $68
million in INX Media, a media and television company with headquarters in Mumbai, according to data collected by Venture Intelligence , a Chennai-based research
firm that tracks private equity in India. In 2008, it made two deals, for a total of $64 million.
In February 2009, New Silk Route said “with a substantial portion of capital still uncommitted, the fund will be an active investor in the region over the next 12-18
months,” according to a press release. It made two more deals in 2009, for $76 million. So far this year, New Silk Route has backed two companies to the tune of
$135 million, according to Venture Intelligence.
New Silk Route has invested less than half of its fund, or about $468 million in publicly disclosed transactions, according to Venture Intelligence.
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02/03/2011 Rajat Gupta Charged With Insider Tradi…
MARCH 1, 2011, 12:24 PM
Ex-Goldman Director Accused of Passing Illegal Tips

By PETER LATTM AN
8:47 p.m. | Updated Seoky ong Lee/Bloomberg News

Rajat Gupta
The Securities and Exchange Commission has accused a former director of Goldman Sachs
and Procter & Gamble of passing illegal tips about those companies to Raj Rajaratnam, the
Galleon Group founder who is to go on trial next week on insider trading charges.
The former director, Rajat K. Gupta, is accused of passing along information on the two
companies’ earnings as well as word of Warren E. Buffett’s $5 billion investment in Goldman
Sachs in 2008.
As a longtime senior executive at McKinsey & Company, Mr. Gupta, 62, is the most
prominent business executive ensnared by the government in a wide-ranging investigation
into insider trading on Wall Street. He ran McKinsey from 1994 to 2003 and counts as
friends and associates some of the most powerful people in business.
In comparison, many of the defendants charged earlier with insider trading were junior
traders and lawyers or midlevel executives. Over the last 18 months, federal prosecutors in
Manhattan have charged 46 people with insider trading; of those, 29 have pleaded guilty.
But the S.E.C.’s civil case against Mr. Gupta reaches into the most elite boardrooms of
corporate America.
“Mr. Gupta was honored with the highest trust of leading public companies, and he betrayed
that trust by disclosing their most sensitive and valuable secrets,” said Robert Khuzami, the
S.E.C.’s director of enforcement, in a statement. “Directors who violate the sanctity of
boardroom confidences for private gain will be held to account for their illegal actions.”
The proceeding against Mr. Gupta perhaps most acutely stings Goldman, which has had at
least three run-ins with the S.E.C. over the last year. Last summer, it struck a $550 million
settlement with the agency over its sale of a complex mortgage investment, without
admitting or denying wrongdoing. And earlier this year it canceled an opportunity for its
clients to invest in Facebook because of worries that the publicity around the deal could
violate S.E.C. rules. A Goldman spokesman declined to comment.
The S.E.C. case ties Mr. Gupta to Mr. Rajaratnam, the Sri Lankan-born billionaire hedge
fund manager at the center of the government’s insider trading inquiry. Mr. Rajaratnam,
who is fighting the criminal charges against him, is to go on trial on Tuesday.
…nytimes.com/…/former-goldman-dire… 1/4
The S.E.C. filing contends that Mr. Gupta provided details about Goldman’s financial health
and plans after the collapse of Lehman Brothers rocked the financial markets. On Sept. 23,
2008, the Goldman board met via telephone to consider and approve Mr. Buffett’s $5 billion
purchase of preferred shares in Goldman.
“Immediately after disconnecting from the board call, Gupta called Rajaratnam from the
same line,” the S.E.C. filing says. A minute later, Galleon funds bought more than more than
175,000 shares of Goldman just minutes before the market closed, the agency says.
After the close, Goldman announced the investment, and its shares rallied on the vote of
confidence by Mr. Buffett. The Galleon funds netted a profit of more than $900,000, the
S.E.C. says.
In another instance, the S.E.C. said that Mr. Gupta passed along an illegal Goldman tip to Mr.
Rajaratnam after a call that previewed Goldman’s positive quarterly earnings results one
week before they were publicly announced. Soon after, Mr. Gupta is said to have initiated a
flurry of telephone calls with Mr. Rajaratnam, who then directed his fund to load up on
Goldman stock and call options. When the stock rose the next day, Mr. Rajaratnam exited his
positions and earned more than $13.6 million in profits, the S.E.C. said.
Mr. Gupta is also accused of disclosing information to Mr. Rajaratnam about P.& G.’s 2008
fourth-quarter earnings on the eve of their release.
In the long investigation of Mr. Rajaratnam, thousands of conversations were recorded,

including some with Mr. Gupta. But the S.E.C filing refers to none of those conversations. In
recounting phone calls between the two men, the filing does not provide details of their
content.
Gary Naftalis, a lawyer for Mr. Gupta, said the S.E.C. accusations were “totally baseless.”
“Mr. Gupta has done nothing wrong,” he said. “There is no allegation that Mr. Gupta traded
in any of these securities or shared in any profits as part of any quid pro quo.”
The case against Mr. Gupta tarnishes an otherwise sterling business career. Born in Kolkata,
India, Mr. Gupta earned an M.B.A. from Harvard Business School in 1974 and joined
McKinsey upon graduation. He was elected head of the consulting firm in 1994, the first non-
Westerner to hold that post.
Mr. Gupta, 62, met Mr. Rajaratnam, who was born in Sri Lanka, in the middle of the last
decade through their work for the Indian School of Business. Mr. Gupta co-founded the
school and is its chairman, and Mr. Rajaratnam was a major donor to the school.
Mr. Gupta was a regular presence at Galleon’s offices at Madison Avenue and 57th Street
and showed up there periodically for lunch. Mr. Rajaratnam’s secretary would order in
Indian or Chinese food and the two men would sit in Mr. Rajaratnam’s office and chat,
according to a former employee who spoke only on the condition of anonymity.
In 2006, Mr. Rajaratnam and Mr. Gupta worked together to start New Silk Route, a private
equity firm focused on investments in India. Mr. Rajaratnam never had an active role in the
New Silk Route. A spokeswoman for New Silk Route declined to comment.
Mr. Rajaratnam told his staff that Galleon had formally engaged McKinsey to help them
better understand companies and run special projects where the fund could “do a deeper
dive” into companies, the former employee said. Nothing came of the engagement, said this
person.
Mr. Gupta is the second McKinsey executive to be ensnared by the government’s insider-
trading inquiry. Anil Kumar, a senior McKinsey executive and onetime protégé of Mr. Gupta,
pleaded guilty in January to leaking confidential information about a merger to Mr.
Rajaratnam and is cooperating in the criminal case against Mr. Rajaratnam.
“We were saddened to learn about the civil charges against our former colleague,” said a
McKinsey spokesman about Mr. Gupta, who left McKinsey in 2007.
Mr. Gupta holds philanthropic posts, including a senior advisory post at the Bill & Melinda
Gates Foundation and a board seat at the Rockefeller Foundation. He lives in Westport,
Conn.
Mr. Gupta voluntarily resigned on Tuesday from the P.&G. board, which he joined in 2007. A
company spokesman said he resigned to prevent any distraction to P.&G. and its board.
At Goldman, Mr. Gupta said he would not stand for re-election in March 2010 and stepped
down from the board in May.
Mr. Gupta earned more than $2.5 million as a director at Goldman and P.&G. Mr. Gupta is
also a member of the board of AMR, the parent company of American Airlines. An American
Airlines spokesman declined to comment.
The case against Mr. Gupta has an unusual procedural twist. Under the Dodd-Frank Act, the
S.E.C. can seek a full range of penalties against people not employed by a financial services
firm through a relatively streamlined proceeding before an S.E.C. administrative law judge.
Historically, if the agency sought penalties against a public company director like Mr. Gupta,
it had to sue in federal court, where the defendant has full discovery rights of the S.E.C.’s
case, including all of its witnesses.
Mr. Naftalis, the lawyer for Mr. Gupta, said in a statement that his client’s “40-year record
of ethical conduct, integrity and commitment to guarding his clients’ confidences is beyond
reproach.”
He also said that Mr. Gupta lost his $10 million investment in a fund managed by Mr.
Rajaratnam that collapsed during the financial crisis, “negating any motive to deviate from a
lifetime of honesty and integrity.”
Ben Protess contributed reporting.
S.E.C. Case Against Rajat Gupta
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04/03/2011 Rajat Gupta’s New Silk eyes AP’s educa…
Services
16 NOV, 2010, 11.02AM IST,TNN
Rajat Gupta’s New Silk eyes AP’s education co

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MUMBAI: The $1.4-billion New Silk Route Private Equity is close to investing Rs 325 crore or roughly $70 million, in Hyderabad-based Sri Chaitanya Educational
Group , one of the country’s largest network of private schools and junior colleges, sources said.
This could be amongst the biggest foreign investments — till date —in India’s education sector that is beginning to see a robust deal flow. NSR is an Asiafocused
PE fund spearheaded by ex-McKinsey honcho Rajat Gupta , a former global head of Citigroup Victor Menezes and Parag Saxena. The fund has issued a term-sheet
(a document guiding legal counsel to a final agreement) and is in the midst of due diligence. The transaction, which will see the fund picking up between 33% to
49% stake, could be clinched within the next 45 days, said an investment banker.
Sri Chaitanya runs around 160 institutions, mostly in Andhra Pradesh, including 116 schools and junior collages. The twenty-five year-old group had mandated Ernst
& Young to raise funds after spurning buyout offer from a large southern corporate house with interest in education.
A senior official at New Silk Route declined to comment. “Nothing yet. We will let you know when something happens,” said YLV Sridhar, finance director at
Chaitanya. In 2008, NSR invested in Lahore-based Becaonhouse Education System, one of the largest school networks in Asia with presence in Pakistan, the
UAE, Bangladesh, Malaysia and Indonesia. Some of NSR’s other notable investments include a recent infusion of capital into Cafe Coffee Day Holdings, KS Oils, a
controlling stake in Destimoney (formerely Dawnay Day) and Aster Infrastrcture Ltd.
India’s education space has attracted several investors off late, with a slew of smaller deals being clinched in the K-12 and vocational trainingsegments. Private
equity funds Sequoia Capital and SONG, in which George Soros is an investor, invested in another Hyderabadbased school chain Gowtham. Besides the scale-up
potential, the relatively high operating margins also explains the growing investor attention on the sector.
Industry sources said profit margins of 30% plus were not uncommon in this space. Unconfirmed information suggested that Chaitanya could be reporting Rs 80
crore in profit earnings on a topline revenue of over Rs 250 crore.
But regulatory hurdles and the fragmented nature of the industry have been hurdles in the way of bulge-bracket investments even though it could be changing slowly.
Private investors are barred from investing directly into educational assets that are held under not-for-profit trusts. In such cases, the private investor will invest into a
hived-off management company that operates the schools.
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04/03/2011 US examining role of Goldman, Rajat G…
16 APR, 2010, 01.00AM IST,PTI
US examining role of Goldman, Rajat Gupta in Galleon scam

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NEW YORK: The US government is examining the possible role of Goldman Sachs and well-known investment banker Rajat Gupta in the Galleon hedge fund insider
trading scam, says a media report. ( Watch )
Prosecutors are looking at whether a Goldman Sachs board member gave information about the entity to Galleon hedge fund owner Raj Rajaratnam during the
height of the financial turmoil, the 'Wall Street Journal' has reported quoting people close to the situation.
The name of Goldman Sachs emerged in a March 22 government letter "listing companies whose trading by Rajaratnam and others in the Galleon case the US is
investigating," it noted.
Quoting people close to the situation, the daily said the "government is examining whether Rajat Gupta --- a current Goldman director, former head of McKinsey &
Co and close associate of Rajaratnam --- shared inside information about Goldman".
The 'Wall Street Journal' noted that no criminal charges or other allegations have been filed against Gupta, nor is there any indication that investigators are looking at
his own stock trading.
Attributing to a spokesman for Gupta, the daily said, "Gupta is unaware of any examination of any such issue and has done nothing wrong".
As per the letter, the government is scrutinising trades by 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.
Since October last year, the US authorities have charged 21 people, including some India-origin people, in the Galleon insider trading scam.
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Fri, Mar 04, 2011 | Updated 06.52PM IST

4 MAR, 2011, 11.45AM IST,REUTERS

Rajat Gupta episode: How will it impact mighty McKinsey?

SECURITIES AND EXCHANGE COMMISSION

SECURITIES ACT OF 1933

SECURITIES EXCHANGE ACT OF 1934

INVESTMENT ADVISERS ACT OF 1940

INVESTMENT COMPANY ACT OF 1940

ORDER INSTITUTING PUBLIC

The Securities and Exchange Commission (“Commission”) deems it appropriate

After an investigation, the Division of Enforcement alleges that:

1. This matter concerns insider trading by Rajat K. Gupta (“Gupta”), who on a

2. Specifically, Gupta disclosed to Rajaratnam material nonpublic information

3. In the course of carrying out the insider trading scheme, Rajaratnam

5. By virtue of his conduct, Gupta willfully violated Section 17(a) of the

6. Gupta, age 62, resides in Westport, Connecticut. From November 2006

C. OTHER RELEVANT ENTITIES

7. Berkshire is a Delaware corporation headquartered in Omaha, Nebraska.

8. Galleon, a Delaware limited partnership, is a hedge fund investment adviser

9. Goldman Sachs is a Delaware corporation headquartered in New York,

10. Procter & Gamble is an Ohio corporation headquartered in Cincinnati,

Gupta Disclosed Material Nonpublic Information to Rajaratnam Concerning

Berkshire’s $5 Billion Investment in Goldman Sachs

12. In September 2008, Gupta disclosed to Rajaratnam material nonpublic

14. Goldman Sachs executives continued to explore various strategic

15. Goldman Sachs CEO Lloyd Blankfein (“Blankfein”) had a long-standing

Gupta Disclosed Material Nonpublic Information to Rajaratnam Concerning

Goldman Sachs’s Financial Results for the Fourth Quarter of 2008

Gupta Disclosed Material Nonpublic Information to Rajaratnam Concerning

Goldman Sachs’s Financial Results for the Second Quarter of 2008

25. Gupta also disclosed to Rajaratnam material nonpublic information

Gupta Disclosed Material Nonpublic Information to Rajaratnam Concerning Procter

34. Gupta also disclosed to Rajaratnam material nonpublic information that

Gupta’s Fiduciary Duty to Keep Confidential All Material, Nonpublic Information

39. Goldman Sachs’s Corporate Governance Guidelines in effect and applicable

Gupta’s Fiduciary Duty to Keep Confidential All Material, Nonpublic Information

In view of the allegations made by the Division of Enforcement, the Commission

B. What, if any, remedial action is appropriate in the public interest against

C. What, if any, remedial action is appropriate in the public interest against

D. What, if any, remedial action is appropriate in the public interest against

E. Whether, pursuant to Section 8A of the Securities Act and Section 21C of

IT IS FURTHER ORDERED that Respondent shall file an Answer to the allegations

This Order shall be served forthwith upon Respondent personally or by certified

IT IS FURTHER ORDERED that the Administrative Law Judge shall issue an

In the absence of an appropriate waiver, no officer or employee of the Commission

04/03/2011 Charges against Rajat Gupta baseless: …

Fri, Mar 04, 2011 | Updated 06.52PM IST

2 MAR, 2011, 10.26AM IST,PTI

Charges against Rajat Gupta baseless: Counsel

Fri, Mar 04, 2011 | Updated 06.54PM IST

3 MAR, 2011, 01.06PM IST,ET BUREAU

Ex-McKinsey head Rajat Gupta says US regulator's allegations 'baseless'

ISB Stands by Gupta

On Wednesday, ISB said Gupta will continue to be its chairman.

Fri, Mar 04, 2011 | Updated 06.53PM IST

16 APR, 2010, 01.13AM IST, SUDESHNA SEN,ET BUREAU

Galleon muck leaves stain on Rajat Gupta

Fri, Mar 04, 2011 | Updated 05.09PM IST

4 MAR, 2011, 05.38AM IST,TNN

India Inc backs Rajat Gupta

Fri, Mar 04, 2011 | Updated 06.53PM IST

7 MAY, 2010, 04.09AM IST,BLOOMBERG

Rajat Gupta and Rajaratnam have 'old' business links

MARCH 1, 2011, 12:24 PM