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Rajat Gupta SEC Investigation

Rajat Gupta SEC Investigation

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Published by newtehelka
Compilation of latest articles on the Rajat Gupta SEC Investigation case
Compilation of latest articles on the Rajat Gupta SEC Investigation case

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Published by: newtehelka on Mar 05, 2011
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03/05/2011

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RECENT
 
NEWS
 
ON
 
THE
 
RAJAT
 
GUPTA
 
EPISODE
 
TIME
LAST
 
FEW
 
DAYS
 
BEFORE
 
04
MAR
2011
 
 
Fri, Mar 04, 2011 | Updated 06.52PM IST
NEW YORK: Can clients still trust the mighty McKinsey & Co? That's something they should be asking after the U.S. Securities and Exchange Commission, aspart of its insider trading crackdown, accused Rajat Gupta, the elite management consultancy's former chief, of betraying Goldman Sachs's secrets.The quality of the private partnership's advice has always been fair game, though not often publicly. Jeffrey Immelt, the General Electric chief executive, told the NewYork Times in December that the consulting firm offered costly dud advice in 2007, downplaying the risks of a financial crisis. But being wrong is a minor sin, and it'snot much of a figleaf for Immelt, either.The Gupta charges are potentially much more damaging. The SEC alleges he leaked inside information on Goldman and Procter & Gamble, whose boards he saton, that netted the Galleon Group hedge fund , founded by the indicted Raj Rajaratnam , tens of millions of dollars. Gupta's lawyer denies the claims.Gupta worked at McKinsey for 34 years until 2007 and the association continued thereafter. He was the firm's managing director, equivalent to its chief executive,from 1993 to 2003. It seems fair to ask to what extent he became a product of the firm, or vice versa. Putting a generous spin on the SEC's detailed allegations,Gupta enjoyed gossiping with his peers about what he was involved in -- even confidential matters.For McKinsey clients, that's potentially even more alarming than the case of Anil Kumar, a former director of the firm, who pleaded guilty to fraud and conspiracy inJanuary last year in the same broad insider trading probe being conducted by US authorities. He admitted accepting $1.75 million to reveal secrets about clients toRajaratnam and knowing the information was being used for trading.McKinsey's reputation rests on its ability to keep secrets. Consultancies, unlike investment banks, don't provide access to financial markets. All they offer iscounsel, which relies partly upon confidences revealed by their clients. According to McKinsey, "Our clients should never doubt that we will treat any informationthey give us with absolute discretion." The allegations against Gupta make it hard for clients not to wonder.The Securities and Exchange Commission has charged Rajat Gupta with leaking inside information on Warren Buffett's $5 billion investment in Goldman Sachsduring the financial crisis, the investment bank's results in two quarters in 2008, and Procter & Gamble's results in 2008. The alleged recipient of the information,hedge fund manager Raj Rajaratnam, traded on the information.Gupta worked at consulting firm McKinsey & Co from 1973 to 2007. He was its managing director from 1993 to 2003. He was a member of the board ofdirectors of Goldman Sachs and Procter & Gamble during the period in question. A lawyer for Gupta denied the claims.Separately, McKinsey director Anil Kumar pleaded guilty in January 2010 to fraud and conspiracy. He said Rajaratnam paid him $1.75 million for inside informationon clients.
4 MAR, 2011, 11.45AM IST,REUTERS
Rajat Gupta episode: How will it impact mighty McKinsey?
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04/03/2011 Rajat Gupta episode: How will it impactindiatimes.com//7625599.cms?prtp1/1
 
 
UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION
SECURITIES ACT OF 1933Release No. 9192 / March 1, 2011SECURITIES EXCHANGE ACT OF 1934Release No. 63995 / March 1, 2011INVESTMENT ADVISERS ACT OF 1940Release No. 3167 / March 1, 2011INVESTMENT COMPANY ACT OF 1940Release No. 29580 / March 1, 2011ADMINISTRATIVE PROCEEDINGFile No. 3-14279
In the Matter of Rajat K. Gupta,Respondent.ORDER INSTITUTING PUBLICADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS PURSUANTTO SECTION 8A OF THE SECURITIESACT OF 1933, SECTIONS 15(b) AND21C OF THE SECURITIES EXCHANGEACT OF 1934, SECTION 203(f) OF THEINVESTMENT ADVISERS ACT OF1940, AND SECTION 9(b) OF THEINVESTMENT COMPANY ACT OF1940I.
The Securities and Exchange Commission (“Commission”) deems it appropriateand in the public interest that public administrative and cease-and-desist proceedings be,and hereby are, instituted pursuant to Section 8A of the Securities Act of 1933 (“SecuritiesAct”), Sections 15(b) and 21C of the Securities Exchange Act of 1934 (“Exchange Act”),Section 203(f) of the Investment Advisers Act of 1940 (“Advisers Act”), and Section 9(b)of the Investment Company Act of 1940 (“Investment Company Act”) against Rajat K.Gupta (“Respondent” or “Gupta”).

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