Rajat Gupta surrenders to FBI in insider trading case

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Rajat Gupta, a former Goldman Sachs board member accused by regulators of passing along confidential corporate information, has surrendered to the FBI.

Gupta is in custody, according to the Associated Press. Charges were not immediately disclosed, but the Securities and Exchange Commission in March accused Gupta of giving inside information about Goldman Sachs to his friend and business partner Raj Rajaratnam.

Gupta served on the boards of Procter & Gamble and the parent company for American Airlines but after being hit with the SEC accusations he stepped down from those positions.

Gupta followed with a lawsuit in March in which he complained about the SEC’s decision to go after him in front of an SEC administrative judge instead of in federal court, where other defendants connected to Rajaratnam had been charged. He said he’d been ‘unfairly and unconstitutionally’ singled out.

Gupta in August agreed to drop the lawsuit as the SEC pledged to file any lawsuit over the same matter in federal court.

At the time of the charges, a lawyer for Gupta insisted that his client had done nothing wrong. Gupta’s lawsuit said there was no ‘plausible reason why Mr. Gupta would have deviated from a lifetime of probity and a career dedicated to safeguarding corporate confidences.”

But, as the AP reported, Gupta’s name featured prominently at the criminal trial earlier this year of Rajaratnam, who received an 11-year prison term, the longest sentence ever for an insider-trading case. But prosecutors had sought 19 to 24 years. The founder of Galleon Group hedge funds was given a lesser sentence in part because of advanced diabetes.

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-- Amy Hubbard