A former Goldman Sachs board member has surrendered to federal authorities to face criminal charges stemming from a massive hedge fund insider trading case.
Rajat Gupta appeared in Manhattan federal court but the charges were not immediately disclosed.
The Securities and Exchange Commissioner (SEC) originally brought civil fraud charges against Gupta in March. The longtime McKinsey & Company chief is accused of providing insider information to Galleon Group founder Raj Rajaratnam, according to the Wall Street Journal.
Some may remember that Raj Rajaratnam was sentenced recently to 11 years in prison for insider trading.
Gupta's lawyer responded by accusing the SEC of launching a "flawed case premised in large part on unreliable evidence being used in an attempt to bring down a man of sterling reputation and remarkable achievements without the procedural safeguards historically accorded to all persons similarly charged."
The Indian-born, Harvard-educated Gupta also has served on the boards of Procter & Gamble and the parent company for American Airlines. He was also a guest at President Barack Obama's first state dinner.
Gupta's name may also sound familiar to Blaze readers because he played prominently at the criminal trial earlier this year of aforementioned Rajaratnam.
Prosecutors produced phone records showing Gupta called Rajaratnam 23 seconds after a Goldman Sachs meeting where it was announced that they were going to post a loss, causing Rajaratnam to sell his entire position in Goldman the next morning and save millions of dollars.
Rajaratnam also earned close to $1 million when Gupta told him that Goldman had received an offer from Warren Buffett's Berkshire Hathaway to invest $5 billion in the banking giant, prosecutors said.
In one tape played at trial, Rajaratnam could be heard grilling Gupta about whether the Goldman Sachs board had discussed acquiring a commercial bank or an insurance company.
"Have you heard anything along that line?" Rajaratnam asked Gupta.
"Yeah," Gupta responded. "This was a big discussion at the board meeting."
Prosecutors sought to maximize the impact of the Gupta tape by calling Goldman Sachs chairman Lloyd Blankfein to testify that the phone call violated the investment bank's confidentiality policies.
Gupta's lawyer Gary P. Naftalis said Tuesday night that his client and Rajaratnam communicated for "legitimate reasons." He said his client didn't trade in any securities, didn't tip Rajaratnam so he could trade and didn't share in any profits.
"The facts demonstrate that Mr. Gupta is an innocent man and that he has always acted with honesty and integrity," Naftalis said in an emailed statement.
The Associated Press contributed to this story.