SEC Obtains Record $13.9 Million Penalty Against Rajat Gupta

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Securities Lawyer 101 Blog

On July 17, 2013, the Securities and Exchange Commission (the “SEC”) obtained a $13.9 million penalty against Rajat K. Gupta for illegally tipping corporate secrets to former hedge fund manager Raj Rajaratnam.  The SEC also obtained an order barring Gupta from serving as an officer or director of a public company.

The SEC previously obtained a $92.8 million penalty against Rajaratnam for prior insider trading charges. 

In the SEC Action, it alleged that Rajat Gupta disclosed confidential information to Rajaratnam about Berkshire Hathaway Inc.’s $5 billion investment in Goldman Sachs as well as nonpublic details about Goldman Sachs’ financial results for the second and fourth quarters of 2008.

George S. Canellos, Co-Director of the SEC’s Division of Enforcement stated, “The sanctions imposed today send a clear message to board members who are entrusted with protecting the confidences of the companies they serve…If you abuse your position by sharing confidential company information with friends and business associates in exchange for private gain, you will be prosecuted to the fullest extent by the SEC.”

In addition to the financial penalty, the order issued today by the Honorable Jed S. Rakoff of the U.S. District Court for the Southern District of New York enjoins Gupta from future violations of the securities laws, and permanently bars him from acting as an officer or director of a public company and from associating with any broker, dealer, or investment adviser.

On June 15, 2012, in a related criminal case, a jury found Gupta guilty of one count of conspiracy to commit securities fraud and three counts of securities fraud. Gupta was sentenced on to a term of imprisonment of two years followed by one year of supervised release, and ordered to pay a $5 million criminal fine.

On Dec. 26, 2012, the SEC obtained a final judgment ordering Rajaratnam to disgorge his share of the profits gained and losses avoided as a result of the insider trading based on Gupta’s tips, plus prejudgment interest.

For further information about SEC enforcement actions and defense, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real S, Suite 202, Boca Raton, Florida, (561) 416-8956, or visit www.securitieslawyer101.com

This memorandum about SEC enforcment actions is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute, legal and compliance advice on any specific matter, nor does this message create an attorney-client relationship. For more information concerning the JOBS Act, crowdfunding, emerging growth companies, Rule 144, Form 8K, FINRA Rule 6490, Rule 506 private placement offerings, Regulation A, Rule 504 offerings, SEC reporting requirements, SEC registration on Form S-1 and Form 10, Pink Sheet listing, OTCBB and OTCMarkets disclosure requirements, DTC Chills, Global Locks, reverse mergers, public shells, go public direct transactions and direct public offerings please contact Hamilton & Associates at (561) 416-8956 or by email at info@securitieslawyer101.com. Please note that the prior results discussed herein do not guarantee similar outcomes.

Hamilton & Associates | Securities Lawyers
Brenda Hamilton, Securities Attorney
101 Plaza Real South, Suite 202 North
Boca Raton, Florida 33432
Telephone: (561) 416-8956
Facsimile: (561) 416-2855

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