Former Goldman Sachs director Rajat Gupta has been charged with insider trading for allegedly sharing secret information, which he learnt at board meetings, with friend and hedge fund manager Raj Rajaratnam.
The Securities and Exchange Commission’s enforcement division alleges Rajaratnam used the information to trade on behalf of Gallion Group’s hedge funds or shared the information with others within the firm who then traded on it before a public announcement was made.
The leaked details were about Warren Buffet’s $5bn investment in Goldman in 2008.
It is alleged the inside information made more than $18m in profits and loss avoidance.
The SEC has previously charged Rajaratnam and others in the widespread insider trading scheme involving the Galleon hedge funds.
SEC enforcement director Robert Khuzami says: “Gupta was honoured with the highest trust of leading public companies, and he betrayed that trust by disclosing their most sensitive and valuable secrets. Directors who violate the sanctity of board room confidences for private gain will be held to account for their illegal actions.”