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BW Businessworld

Loose Lips

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Tragic is what it is, the arrest of Rajat Gupta, the first Indian-born chief executive of a global corporation — he headed McKinsey & Co for nine years from 1994. Gupta is charged with conspiracy to commit securities fraud and five counts of securities fraud. Raj Rajaratnam, the head of hedge fund Galleon, to whom Gupta is alleged to have leaked insider information he had as a board member of Goldman Sachs, has been sentenced to 11 years.

The trouble is Gupta seems to have gained nothing from his alleged illegal activity. Yes, he is invested in a Galleon fund, but one that lost money (about $10 million, according to some). The Federal Bureau of Investigation, however, argues that his information resulted in Galleon avoiding $23 million in losses in trades of Goldman Sachs.

But the case highlights an issue that bothers many on Wall Street: what kind of information should laws against insider trading cover? Gupta may end up in jail for just being indiscreet; for someone in his position, that is foolish.

STRICTLY BUSINESS

Israeli model Bar Refaeli plans to promote Undeez, an online store for designer lingerie that she has launched, herself. So far, it has managed to raise $1 million from angel investors.

(This story was published in Businessworld Issue Dated 07-11-2011)