| NEW YORK, April 16
NEW YORK, April 16 U.S. prosecutors have added a
new insider trading allegation against Rajat Gupta, a former
director of Goldman Sachs Group Inc and Procter & Gamble
Co charged with illegally tipping his former friend Raj
Rajaratnam, the convicted founder of Galleon Group hedge fund.
Prosecutors said in a letter to U.S. District Judge Jed
Rakoff made public on Monday that Gupta tipped Rajaratnam
"relating to P&G's organic sales growth forecast for the
October-December quarter prior to P&G's public announcement on
or about Dec. 11, 2008."
They said this allegation was based on information received
on April 5 in Galleon documents.
Gupta was indicted in October and he is the highest-ranking
executive charged in a broad U.S. crackdown on insider trading
at hedge funds. He is charged with five counts of securities
fraud and one count of conspiracy. He could face up to 25 years
in prison if convicted of securities fraud.
He has denied all charges against him, and is scheduled to
go on trial on May 21.
Rajaratnam is serving an 11-year prison sentence after being
convicted by a jury at trial last year on evidence largely based
on unprecedented wiretaps.
Prosecutors may not add allegations unless new information
comes to light. In their letter, which is dated April 9 and
filed in Manhattan federal court, prosecutors suggested that
more allegations against Gupta might be forthcoming.
"The government ... is waiting for outstanding requests for
information from a number of third-parties," the letter said.
"For example, the government is waiting for information relating
to P&G's public announcement of its earnings on or about Jan.
Gupta, a former head of the McKinsey & Co, is accused of
providing inside tips about Goldman Sachs and Procter & Gamble
board meetings to Rajaratnam in 2007 and 2008.
In a statement, his lawyers said that "newly added charges
-- like the ones brought last year -- are not based on any
direct evidence, but rely on supposed circumstantial evidence."
Prosecutors previously said Gupta participated from
Galleon's offices in a Goldman conference call in March 2007,
which discussed better-than-expected quarterly results that had
yet to be released. Rajaratnam bought Goldman stock 25 minutes
after the call ended, prosecutors said.
Investigators recorded at least two discussions between
Rajaratnam and Gupta.
The indictment said Gupta gave Rajaratnam advance knowledge
of a $5 billion investment in Goldman by Warren Buffett's
Berkshire Hathaway Inc at the height of the
2008 financial crisis, Goldman's surprise fourth-quarter 2008
loss, and P&G's quarterly earnings in late January 2009.
The case is USA v Gupta, U.S. District Court for the
Southern District of New York, No. 11-907.