Feds Sue Former Goldman Director

The Securities and Exchange Commission has charged Rajat K. Gupta, a former director at Goldman Sachs and board member with Proctor & Gamble Co., with insider trading for allegedly providing investment tips about the results for both companies to his friend and business associate Raj Rajaratnam. Founder of Galleon Group and a former board member of Goldman Sachs, Rajaratnam was tipped off by Gupta during a conference call to invest $5 billion in Warren Buffett's Berkshire Hathaway Inc., according to the SEC complaint filed Tuesday. On the same call, the SEC claims Gupta also alerted Rajaratnam of Goldman's public equity offering before it was announced in September 2008. Shortly after they hung up, Rajaratnam allegedly arranged for Galleon to buy more than 175,000 Goldman shares, and subsequently liquidated his holdings the day after Goldman's equity offering became public, raking in an immediate $900,000. Before Goldman's second-quarter announcement, Rajaratnam allegedly generated more than $13.6 million in illicit profits from trading and avoided more than $3 million in losses based on Gupta's tip about fourth-quarter results, the SEC said. He will go on trial next week and is among 26 people charged for criminal insider-trading.