In the Matter of Rajat K. Gupta, Respondent, the SEC's Division of Enforcement alleges that:

This matter concerns insider trading by Rajat K. Gupta (“Gupta”), who on a number of occasions disclosed material nonpublic information that he obtained in the course of his duties as a member of the Boards of Directors of The Goldman Sachs Group, Inc. (“Goldman Sachs”) and The Procter & Gamble Company (“Procter & Gamble”) to Raj Rajaratnam (“Rajaratnam”), the founder and a Managing General Partner of the hedge fund investment adviser Galleon Management, LP (“Galleon”). Rajaratnam, in turn, either caused the Galleon hedge funds that he managed to trade based on the material nonpublic information, or passed the information on to others at Galleon and caused trades based on the information.

Specifically, Gupta disclosed to Rajaratnam material nonpublic information concerning Berkshire Hathaway Inc’s (“Berkshire”) $5 billion investment in Goldman Sachs before it was publicly announced on September 23, 2008, as well as Goldman Sachs’s financial results for both the second and fourth quarters of 2008. Rajaratnam caused the various Galleon hedge funds that he managed to trade based on the material nonpublic information, generating illicit profits and loss avoidance of more than $17 million. In addition, Gupta disclosed to Rajaratnam material nonpublic information concerning Procter & Gamble’s financial results for the quarter ending December 2008. Rajaratnam relayed this information to others at Galleon, who caused Galleon funds to trade based on the information, generating illicit profits of over $570,000.

In the course of carrying out the insider trading scheme, Rajaratnam informed certain conspirators that he obtained nonpublic information concerning Goldman Sachs from his source on the company’s Board. Rajaratnam informed at least one other conspirator that he obtained nonpublic information concerning Procter & Gamble from his source on Procter & Gamble’s Board. As set forth below, Gupta was Rajaratnam’s source on both companies’ Boards and knowingly or recklessly disclosed material nonpublic information to Rajaratnam for use in trading activities.

During the relevant period, Gupta had a variety of business dealings with Rajaratnam and stood to benefit from his relationship with Rajaratnam. In addition, Gupta was an investor in, and a director of, Galleon’s GB Voyager Multi-Strategy Fund SPC, Ltd., a master fund with assets that were invested in numerous Galleon hedge funds, including those that traded based on Gupta’s illegal tips.

By virtue of his conduct, Gupta willfully violated Section 17(a) of the Securities Act, and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.

Continue reading on page 3 of:   [SEC Administrative Proceeding 3-14279, 3/1]