Who Framed Rajaratnam?

Was it Raj or Rajat?

A former board member of Goldman Sachs [GS 162.75 -1.03 (-0.63%) ] was accused Tuesday by the Securities and Exchange Commission of providing inside information about the investment bank—including its earnings and a pending $5 billion investment by Berkshire Hathaway—to embattled hedge fund founder Raj Rajaratnam.

Connecticut business consultant Rajat Gupta, who is currently a board member of Procter & Gamble [PG 63.03 -0.02 (-0.03%) ] and American Airlines [AMR 6.56 -0.18 (-2.67%) ], provided the information about Goldman to Rajaratnam, who then traded on it for his Galleon hedge funds, generating more than $18 million of gains, the SEC said in a press release.

Gosh, it’s a good thing the US Government is fully stocked with Goldman alums.

Update: seems he might have been a busy little bunny

So let’s start with this question: if we look back at past deals involving Gupta, do we see anything similar to the pre-announcement trading that we saw in shares of Goldman before the Berkshire Hathaway investment was announced?

The answer is yes.

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