Goldman Sachs’ Gupta linked to tainted tycoon

Rajat Gupta, director of Goldman Sachs and an icon of Indian American success in US business, may have tipped off hedge-fund billionaire Raj Rajaratnam about a $5 billion investment in Goldman by Warren Buffett’s Berkshire Hathaway before the deal was made public in 2008, the Wall Street Journal said in a report on Friday.

Rajat Gupta, director of Goldman Sachs and an icon of Indian American success in US business, may have tipped off hedge-fund billionaire Raj Rajaratnam about a $5 billion investment in Goldman by Warren Buffett’s Berkshire Hathaway before the deal was made public in 2008, the Wall Street Journal said in a report on Friday.

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Gupta (61) — an alumnus of Modern School, Delhi and the Indian Institute of Technology, Delhi and the Harvard Business School — is also the chairman of the board of the Indian School of Business, Hyderabad. He rose to prominence when he became the first overseas-born managing director of global consulting firm McKinsey & Co.

The WSJ report claimed that at the height of 2008 financial crisis, Gupta told Sri Lankan-born Rajaratnam, the founder of hedge fund Galleon, about the investment by Berkshire in advance.

“The revelation marks a significant turn in government’s case against Raj Rajaratnam, the hedge-fund titan at the centre of the largest insider-trading case in a generation,” the report stated.

Insider trading involves illegal or unethical leak of confidential information for profit.

Gupta’s lawyer has categorically denied the charges of insider trading.

Rajaratnam declined to comment on any discussions with Gupta. Goldman also declined to comment, the WSJ said.

In a court filing on March 22, the US government alleged that Rajaratnam or ‘co-conspirators’ traded on non-public
information about Goldman Sachs.

In a filing last week, the government had provided more details about the information it alleged Rajaratnam received, including advance notice about the Buffett transaction with Goldman Sachs, the WSJ said.

Attributing to a person familiar with the matter, the daily stated, “the information came from Gupta”.

However, Gupta has not been charged in the case.

The investment, preferred shares in Goldman Sachs paying a 10 per cent dividend, has been lucrative for Warren Buffett with Berkshire Hathaway reaping profits totaling $750 million.