Prosecutors in the Rajat Gupta case said in court yesterday that “former McKinsey & Co. chief Rajat Gupta gave convicted insider-trader Raj Rajaratnam advance word about Procter & Gamble’s plan to sell Folgers Coffee in 2008,” reports FINAlternatives.
“In June 2008, Procter & Gamble sold its Folgers Coffee business to J.M. Smucker,” said Assistant U.S. Attorney Richard Tarlowe. “The allegation is that Mr. Gupta disclosed the information about that before it was public to Mr. Rajaratnam.”
Prosectors added that “Gupta was Rajaratnam’s only source for that information.” Tarlowe also said “it was ‘more likely than not’ that the government would file a superseding indictment with more charges against Gupta.”
U.S. District Judge Jed Rakoff dealt another blow to Gupta’s defense yesterday, “saying he would not likely become the first judge in the recent raft of insider-trading cases to disallow wiretap evidence.” Gupta’s lawyers had requested that Judge Rakoff disallow this evidence, “arguing that the government is not authorized to use wiretaps in insider-trading cases.” Prosecutors have thousands of wiretapped conversations between Gupta and Raj Rajaratnam, the Galleon Group founder convicted of insider trading last year and sentenced to 11 years in prison. In explaining why he likely would not be disallowing the evidence, “Rakoff cited Rajaratnam’s trial and U.S. District Judge Richard Holwell’s ruling that the taps were admissible.” Rakoff went as far to say, “Looking at it realistically, if I were the defense, I would not be optimistic on this particular motion.”
Gupta’s trial is scheduled to start on April 9.