Gupta didn't tip, trade or share profits: Attorney

Management consultant Rajat Gupta, who is facing serious charges in US courts, neither traded in shares nor tipped hedge fund Galleon’s chief, Raj Rajarathinam, according to the former Mckinsey chief’s attorney.

Gary P Naftalis, in an email response, told Business Standard, “He did not trade in any securities, did not tip Mr Rajaratnam so he could trade, and did not share in any profits as part of any quid pro quo.”

Gupta, who was on the board of directors of top American companies such as Goldman Sachs and Procter & Gamble, allegedly revealed details to Rajarathinam seconds after these meetings enabling, an advantage over the market.

The statement assumes significance after news reports suggested the authorities do not have sufficient evidence to nail Gupta. Usually, insider-trading cases are against people who profited directly from trades, based on confidential information. Gupta doesn’t fall into that category, Naftalis argued. “The facts in this case demonstrate that Mr Gupta is innocent of any of these charges and that he has always acted with honesty and integrity,” he added.

The Securities and Exchange Commission has asserted that Gupta received indirect profits from Rajarathinam’s illicit trades, since he was an investor in Galleon funds.

The complaint also refers to Gupta’s “variety of business dealings with Rajarathinam”, and alleges the former McKinsey chief “stood to benefit from his relationship with Rajarathinam”.

The indictment said Gupta revealed inside information to Rajarathinam to deepen his relationship with the Galleon chief. “Gupta benefited and hoped to benefit from his friendship and business relationships with Rajarathinam in various ways, some of which were financial,” the indictment said.

According to Naftalis, Gupta had legitimate reasons to communicate with Rajarathinam — and he did not gain from the investment in Galleon. “There were legitimate reasons for any communications between Mr Gupta and Mr Rajaratnam – not the least of which was Mr Gupta’s attempt to obtain information regarding his $10 million investment in the GB Voyager fund managed by Mr Rajaratnam.”

He also pointed out how Gupta lost his entire investment in the fund at the time of the events in question, “negating any motive to deviate from a lifetime of probity and distinguished service.”

“We are confident that these accusations – which are based entirely on circumstantial evidence – cannot withstand scrutiny and that Mr Gupta will be completely exonerated of any wrongdoing,” Naftalis added.