Volume 10, 2013
Marlene M. Reed, Rochelle R. Brunson
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.