The Wall Street Journal reports that Goldman Sachs (GS) director Rajat Gupta tipped off Galleon’s hedge-fund manager Raj Rajaratnam, who has been indicted on criminal insider trading charges, about a $5 billion investment in Goldman by Warren Buffet’s Berkshire Hathaway (BRKa) (BRKb).
A government probe of Gupta’s relationship with Rajaratnam has turned up evidence that someone may have leaked Warren Buffett’s plan to put $5 billion into Goldman. That information came from Mr. Gupta, a person familiar with the matter told the Journal.
The paper adds that Federal prosecutors had intercepted phone conversations between the two men where the non-public data regarding Berkshire’s cash injection was discussed. Goldman’s shares traded in mid $85s on Sept. 18, 2009. The stock spiked more than 40% to $125 by the time the Buffett deal was disclosed to the public.
Mr. Gupta, former head of the world’s most prestigious consulting firm, McKinsey & Co., denies any wrongdoing in the matter. According to his lawyers, he “has neither violated any law nor done anything else improper”.
Is worth pointing out that Gupta has also been accused of leaking information to Rajaratnam who ran $3.7 billion hedge fund Galleon about Goldman’s earnings in June and September of 2008 before they were announced.
Gupta, 61, told Goldman last month he wouldn’t seek re-election as a director.