“The mightiest has fallen,” said Kaja Whitehouse in the New York Post. Last week, Rajat Gupta, a former director at Goldman Sachs and head of consulting firm McKinsey, was convicted of leaking corporate secrets to a billionaire hedge-fund manager. It’s one of the government’s biggest insider-trading convictions yet, and a stunning fall from grace for Gupta, who “moved in the highest echelons of corporate America.” The Indian business community is particularly devastated, said James Crabtree and Rahul Jacob in the Financial Times. Gupta, who overcame orphanhood in Kolkata, India, before attending Harvard Business School, was one of the most celebrated members of India’s “Davos set,” lauded for both his business acumen and his charitable work, and regularly cited as the first Indian head of a global company. “Rajat was a hero and a role model to many of us,” said Jayant Sinha, director of a philanthropic investment firm in India. “It is just really heartbreaking.”
It was certainly groundbreaking, said Peter Lattman and Azam Ahmed in The New York Times, since the government had little more than circumstantial evidence against Gupta. Raj Rajaratnam, the hedge-fund manager he was accused of tipping off, was convicted last year with incriminating wiretaps, but in this case prosecutors had no smoking gun. Instead, they methodically built their case on the suspicious timing of phone calls, evidence from trading logs, and witness statements. “Wall Street should be worried,” said Alison Frankel in Reuters.com. Gupta was never caught on tape passing corporate secrets, and there’s no evidence that he profited directly from Rajaratnam’s trades. What damned him were wiretaps of Rajaratnam obliquely referring to a Goldman insider. Now “no one who’s passing along insider information can be confident it won’t someday end up on a wiretap played before a jury”—even if that wiretap targeted someone else.
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