Rajat Gupta, former Goldman Sachs director and McKinsey & Company managing director, voluntarily surrendered to the FBI, which has charged him with insider trading. Prosecutors are expected to charge Mr Gupta with tipping Galleon's Rajaratnam about a $5bn injection of capital from Warren Buffett during the height of the financial crisis, and in advance of an announcement that the bank suffered incurred its 1st quarterly earnings loss as a public company in late 2008. Mr. Gupta’s case has been a tricky one for the government.  Though his name came up repeatedly at the trail of Raj Rajaratnam’s - both in testimony and in secretly recorded phone conversations - the Justice Department never filed charges against him.  The S.E.C. filed an administrative action against Mr. Gupta, and he countersued. The agency later dropped the civil proceedings, but reserved the right to refile the case. The strength of the government’s current case is unclear, but details that emerged during Raj Rajaratnam’s trial were explosive.  In its original action, the S.E.C. accused Mr. Gupta of passing confidential information about Goldman and Procter & Gamble to Mr. Rajaratnam, who then traded on the news.  The agency also claimed that Mr. Gupta gave Mr. Rajaratnam advance word of Warren Buffett’s $5 billion investment in Goldman during the darkest days of the financial crisis, in addition to other confidential information. Some of the most powerful evidence for prosecutors may not have been presented at Rajaratnam's insider trading trial.  Apparently, Gupta's information about Goldman Sachs was revealed on recorded phone calls between Mr. Gupta and Raj Rajaratnam and his employees;  as such, the recordings could be inadmissible if Mr. Gupta’s case goes to trial.

e,g, - In one call that the jury heard Mr Rajaratnam tell someone:  “I heard yesterday from somebody who’s on the board of Goldman Sachs that they are going to lose $2 per share.”  In a different call, Mr. Rajaratnam said, “I got a call saying something good is going to happen to Goldman.”

Stunning Reversal of Fortunes for Gupta. In charging Mr. Gupta, the government will tie up one of the biggest loose ends resulting from the investigation into the Galleon Group, which began nearly 5 years ago at the S.E.C..  Since then, more than two dozen people have pleaded guilty or been convicted of swapping illegal tips around company earnings and other major corporate events.  Galleon co-founder Raj Rajaratnam was sentenced to 11 years in prison for making tens of millions of dollars by trading on confidential tips. The charges are a stunning reversal of fortunes for Mr. Gupta.  A native of India, he graduated from Harvard B-School and had a global profile as an adviser to some of the nation’s most iconic companies.  He served as a director at Goldman, Procter & Gamble and the parent company of American Airlines.   In addition to his professional pedigree, Mr. Gupta is a noted philanthropist and has served  in coveted posts with the Bill and Melinda Gates Foundation. While the majority of those charged have been traders and analysts on Wall Street, Mr. Gupta, 62, is the first to be implicated from the upper echelons of corporate America. Gary Naftalis, a lawyer for Mr. Gupta, said in a statement on Tuesday:  “The facts demonstrate that Mr. Gupta is an innocent man and that he acted with honesty and integrity.”   He added that there is no evidence that his client ever personally traded the securities or shared profits as part of a quid pro quo arrangement. (Click here to read our related story in today's What Went Wrong). For further details, go to:   [Dealbook, 10/26/11]   [FT, 10/26/11].