Wall Street big-hitter linked to Raj Rajaratnam is arrested

In one of the most high-profile white-collar arrests in Wall Street history, FBI agents yesterday arrested Rajat Gupta, a former Goldman Sachs board director, on insider trading charges directly linked to the Galleon Group hedge fund scandal which led last month to the sentencing of its founder Raj Rajaratnam to 11 years in prison.

Mr Gupta, who also served on the boards of American Airlines and Procter & Gamble, and until his retirement in 2007 was global head for the consulting giant McKinsey & Co, surrendered himself to the FBI at his home in Westport, Connecticut, and was taken directly to Manhattan, where he was due to appear in court later in the day.

Prosecutors allege that Mr Gupta, 62, passed secret corporate information to Rajaratnam and his fund. He faces one count of conspiracy and five counts of securities fraud. "Rajat Gupta was entrusted by some of the premier institutions of American business to sit inside their boardrooms, among their executives and directors, and receive their confidential information," Manhattan US Attorney Preet Bharara said. "As alleged, he broke that trust and instead became the illegal eyes and ears in the boardroom for his friend and business associate, Raj Rajaratnam, who reaped enormous profits from Mr Gupta's breach of duty."

A spokesman for his lawyers insisted upon Mr Gupta's innocence.