A U.S. court has levied a US$13.9 million penalty against former Goldman Sachs board member Rajat Gupta for illegally tipping former hedge fund manager Raj Rajaratnam.
The U.S. Securities and Exchange Commission (SEC) said Wednesday that Judge Jed Rakoff of the U.S. District Court for the Southern District of New York levied the fine against Gupta. The court also permanently banned him from acting as an officer or director of a public company, and from associating with any broker, dealer, or investment adviser.
Gupta, who was found guilty of one count of conspiracy to commit securities fraud and three counts of securities fraud after a trial last June, and he received a two year jail term, followed by one year of supervised release, and ordered to pay a US$5 million fine.
In its complaint filed in late 2011, the SEC alleged that Gupta disclosed confidential information to Rajaratnam about Berkshire Hathaway Inc.’s US$5 billion investment in Goldman Sachs as well as nonpublic details about Goldman Sachs’s financial results for the second and fourth quarters of 2008.
“The sanctions imposed today send a clear message to board members who are entrusted with protecting the confidences of the companies they serve,” said George Canellos, co-director of the SEC’s Division of Enforcement. “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.”