Rajat lands in another suit

Jun 07, 2011 - Reuters |

New York

June 6: A Goldman Sachs Group Inc shareholder has sued Mr Rajat Gupta, a former director of the investment bank, over trades revealed in civil and criminal insider trading cases against Mr Gupta and convicted Galleon hedge fund founder Raj Rajaratnam. The lawsuit, filed in Manhattan federal court on Monday, said Goldman shareholder, Mr James Mercer of Kirkland, Washington, sought judgment for profits from millions of dollars in transactions. It said Mr Mercer wrote to the Goldman board on March 11 explaining that Mr Gupta failed to disclose the details of his conduct and relationship with Rajaratnam as required by statute.

Rajaratnam, 53, was convicted in May on charges of securities fraud and conspiracy for insider trading, including Goldman corporate secrets leaked to him by his friend Mr Gupta. The former director is an unindicted co-conspirator in the case and denies any wrongdoing. He faces civil charges in the Rajaratnam matter filed by the US Securities and Exchange Commission (SEC) and is fighting those allegations with his own lawsuit against the market regulator. Mr Gupta’s lawyer, Mr Gary Naftalis, said that the shareholder lawsuit is without merit and we will defend it.”

A spokesman for Goldman Sachs declined to comment. The firm was identified as a nominal plaintiff by the shareholder. During Mr Rajaratnam’s two-month trial, US prosecutors played secretly-recorded phone conversations in which Rajaratnam is heard discussing information he received from Mr Gupta about Goldman Sachs. These and other conversations between the two men in 2008 are also cited in the SEC’s complaint against Mr Gupta. The shareholder lawsuit focused on short-swing trading — trading within a period of less than six months. The SEC alleges that profits and loss avoidance amounted to $17 million from tips on Berkshire Hathaway’s $5 billion investment in Goldman at during recession and its second and fourth quarter financial results in 2008. “Rajaratnam engaged in short-swing trading of Goldman securities, which generated profits,” the lawsuit added.

Post new comment

<form action="/comment/reply/78311" accept-charset="UTF-8" method="post" id="comment-form"> <div><div class="form-item" id="edit-name-wrapper"> <label for="edit-name">Your name: <span class="form-required" title="This field is required.">*</span></label> <input type="text" maxlength="60" name="name" id="edit-name" size="30" value="Reader" class="form-text required" /> </div> <div class="form-item" id="edit-mail-wrapper"> <label for="edit-mail">E-Mail Address: <span class="form-required" title="This field is required.">*</span></label> <input type="text" maxlength="64" name="mail" id="edit-mail" size="30" value="" class="form-text required" /> <div class="description">The content of this field is kept private and will not be shown publicly.</div> </div> <div class="form-item" id="edit-comment-wrapper"> <label for="edit-comment">Comment: <span class="form-required" title="This field is required.">*</span></label> <textarea cols="60" rows="15" name="comment" id="edit-comment" class="form-textarea resizable required"></textarea> </div> <fieldset class=" collapsible collapsed"><legend>Input format</legend><div class="form-item" id="edit-format-1-wrapper"> <label class="option" for="edit-format-1"><input type="radio" id="edit-format-1" name="format" value="1" class="form-radio" /> Filtered HTML</label> <div class="description"><ul class="tips"><li>Web page addresses and e-mail addresses turn into links automatically.</li><li>Allowed HTML tags: <a> <em> <strong> <cite> <code> <ul> <ol> <li> <dl> <dt> <dd></li><li>Lines and paragraphs break automatically.</li></ul></div> </div> <div class="form-item" id="edit-format-2-wrapper"> <label class="option" for="edit-format-2"><input type="radio" id="edit-format-2" name="format" value="2" checked="checked" class="form-radio" /> Full HTML</label> <div class="description"><ul class="tips"><li>Web page addresses and e-mail addresses turn into links automatically.</li><li>Lines and paragraphs break automatically.</li></ul></div> </div> </fieldset> <input type="hidden" name="form_build_id" id="form-e569da4606c54a990c64e5d092382fa9" value="form-e569da4606c54a990c64e5d092382fa9" /> <input type="hidden" name="form_id" id="edit-comment-form" value="comment_form" /> <fieldset class="captcha"><legend>CAPTCHA</legend><div class="description">This question is for testing whether you are a human visitor and to prevent automated spam submissions.</div><input type="hidden" name="captcha_sid" id="edit-captcha-sid" value="86616411" /> <input type="hidden" name="captcha_response" id="edit-captcha-response" value="NLPCaptcha" /> <div class="form-item"> <div id="nlpcaptcha_ajax_api_container"><script type="text/javascript"> var NLPOptions = {key:'c4823cf77a2526b0fba265e2af75c1b5'};</script><script type="text/javascript" src="http://call.nlpcaptcha.in/js/captcha.js" ></script></div> </div> </fieldset> <span class="btn-left"><span class="btn-right"><input type="submit" name="op" id="edit-submit" value="Save" class="form-submit" /></span></span> </div></form>