jcl and the Harvard connection?
From Yahoo tech ticker
Yesterday, the SEC charged a former board member of Goldman Sachs, Rajat Gupta, with insider trading.
Gupta allegedly passed confidential information about Goldman and Procter & Gamble, where Gupta was also a board-member, to a hedge-fund friend named Raj Rajaratnam. Rajaratnam, who has already been charged with insider trading, then allegedly traded on this information.
Gupta's lawyer has dismissed the charges as "baseless," but after reading the SEC's complaint against Rajat Gupta , we can't imagine any possible explanation for what occurred other than the one the SEC has laid out.
Rajat Gupta graduated from Harvard Business School. He was a senior partner at McKinsey & Co. He was a member of the board of Goldman Sachs and Procter & Gamble. He has been in business for more than 40 years. If anyone would know how devastating the mere appearance of impropriety can be in such circles, it would be Gupta.
And yet, repeatedly, if the SEC's complaint is accurate, Gupta ended confidential board calls with the Goldman and P&G boards and, within seconds, picked up the phone to call Rajaratnam, who immediately bought or sold shares of Goldman and P&G. Prior to making the trades, Rajaratnam also told colleagues, who, unbeknownst to him, were co-operating with the feds, that he had received confidential information from a Goldman and P&G board member and that that was why he was making the trades.
If the SEC's allegations are true, Gupta's behavior here is appalling. It is a violation of the most basic and important duty of any senior executive, let alone a board member. The fact that it apparently occurred not at dime-a-dozen public companies--and not even at dime-a-dozen Fortune 500 companies--but at Goldman Sachs and Procter & Gamble, is a disgrace.
As Aaron Task points out in our discussion here, it is also further evidence that the Wall Street "game is rigged" in favor of wealthy insiders. So kudos to the SEC for cracking down.
