I didn’t follow the trial of former Goldman Sachs Group Inc. director Rajat Gupta. It seemed like a fairly straight-forward case under the current jurisprudence for insider trading. He possessed material, non-public information. He had that information because he sat on the board of directors of Goldman Sachs. Because he was a board member he had a duty not to disclose the information. He disclosed the information in violation of that duty.
The interesting part is that Gupta did not receive a direct financial benefit from tipping the information. He did not trade on the securities and did not get a piece of the financial reward gained by the person he gave the information to. The government put some indirect benefit into evidence and that was enough.
The easy lesson is to make sure that your policies and training point out that tipping material, non-public information can have the same consequences as trading on that information.
Sources:
- Insider Case Lands Big Catch in the Wall Street Journal
- A Conflicted Jury Finds Rajat Gupta Guilty in the New York Times
- Gupta Verdict’s Message to GCs: Improve Compliance ASAP by Sue Reisinger in Corporate Counsel
Image of Rajat Gupta by Sebastian Derungs
