THE CASE & DE­FENCE

For­mer Gold­man Sachs di­rec­tor Rajat Gupta faces one count of con­spir­acy to com­mit se­cu­ri­ties fraud and five counts of se­cu­ri­ties fraud

India Today - - THE BIG STORY -

PROS­E­CU­TION’S CHARGES

March 12, 2007 Gupta par­tic­i­pated by tele­phone, from the premises of Ra­jarat­nam’s New York hedge fund Galleon Group, in the au­dit com­mit­tee meet­ing of the Gold­man Sachs board about the com­pany’s quar­terly earn­ings to be an­nounced the next day ( March 13). Twenty- five min­utes af­ter the call ended, Galleon funds bought 3,50,000 shares of Gold­man stock.

Septem­ber 23, 2008 Gupta par­tic­i­pated by tele­phone in a spe­cial meet­ing of the Gold­man Sachs board where a $ 5 bil­lion ( Rs 25,000 crore) in­vest­ment from Berk­shire Hath­away was ap­proved. Six­teen sec­onds af­ter the call, Gupta called Ra­jarat­nam at his New York of­fice. At 3.58 p. m., two min­utes be­fore the mar­kets closed, Galleon bought 2,17,200 shares in Gold­man stock.

Oc­to­ber 23, 2008 Gupta par­tic­i­pated by tele­phone in a Gold­man Sachs board meet­ing where mem­bers were told the com­pany was los­ing $ 2 ( Rs 100) per share that quar­ter. Twenty three sec­onds af­ter the call ended, Gupta called Ra­jarat­nam. On Oc­to­ber 24, as soon as the mar­kets opened, Galleon sold its en­tire long po­si­tion in Gold­man Sachs.

Jan­uary 29, 2009 At 9 a. m., Gupta par­tic­i­pated by tele­phone from Switzer­land in the au­dit com­mit­tee meet­ing of the P& G board, where the next day’s quar­terly earn­ings re­lease was dis­cussed, in­clud­ing a lower sales guid­ance for the fis­cal year. At 1.18 p. m., Gupta called Ra­jarat­nam from Switzer­land. From 2.52 p. m., Galleon sold 1,80,000 shares of P& G stock.

GUPTA’S AR­GU­MENT

Ref­er­ences to Gupta in Ra­jarat­nam’s con­ver­sa­tions with third par­ties are hearsay. There is no ev­i­dence of Ra­jarat­nam hav­ing traded on in­for­ma­tion given by Gupta in the taped con­ver­sa­tion be­tween the two. The gov­ern­ment is aware that Ra­jarat­nam had other sources at Gold­man Sachs. There is no ev­i­dence of Gupta re­ceiv­ing mon­e­tary ben­e­fits from Ra­jarat­nam’s trad­ing based on in­sider in­for­ma­tion. They were not on good terms fol­low­ing the loss of Gupta’s $ 10 mil­lion ( Rs 50 crore) in­vest­ment in a Galleon fund in 2008. Gupta had le­git­i­mate rea­sons to call and speak to Ra­jarat­nam. He had in­vested with Galleon. They were also co- founders of the pri­vate eq­uity firm New Silk Route which was set up in 2006.

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