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Journal of Business Ethics Education

Volume 10, 2013

Marlene M. Reed, Rochelle R. Brunson
Pages 339-360
DOI: 10.5840/jbee20131017

Alleged Board Insider Trading: The Case of Rajat Gupta

This case recounts the story of Rajat Gupta, a Goldman Sachs board member and senior partner emeritus of McKinsey & Co., who was accused by the government of giving critical nonpublic financial information to Raj Rajaratnam, Galleon Group founder, during the financial crisis of 2008. The information passed along to Rajaratnam was about a pending $5 billion investment by Warren Buffett’s Berkshire Hathaway in Goldman Sachs at a time when its stock had been faltering. The government alleged that based on this information, Rajaratnam purchased a large number of shares in the company and then sold them when the deal became public and Goldman’s stock rose. Rajaratnam purportedly made $18 million on these trades.

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