Rajat Gupta's Journey Into Prison: Insider Trading

Rajat Gupta's journey into prison for insider trading marks an end to an astonishing success story and punctuates his quick fall from grace. The retired head of Mckinsey and a former Goldman Sachs board member was judged guilty of conspiracy and securities fraud for leaking secrets of the boardroom to billionaire hedge fund manager Raj. After almost a month long trial in Manhattan Fed Court, the jury took only 2 days to reach at a verdict. They found Gupta guilty of leaking confidential information about Goldman Sachs on 3 different occasions in 2008.They also convicted him on a conspiracy charge.
Rajat Gupta was a native of Kolkata and moved to New Delhi. His father was a disciple of Mahatma Gandhi and was jailed in the fight for independence and was later a journalist. Both his parents died when he was in his teens but he still thrived as an anchor

to his family and academically. During his engineering at IIT Delhi, he was a man with a big personality, extremely bright and talented and ran the student government. The seeds of the passion and drive to become big and rich in life were sown there. He wrote his essays to apply to Harvard in a small coffee shop.
When he was admitted to Harvard, Gupta agonized about leaving his siblings but believed that “this was an opportunity that he could not afford to miss”. After arriving in USA, he delivered newspapers to support himself. A couple of years later, he broke into McKinsey and rose through the ranks very swiftly where he served till 2003. Gupta was successful in blazing the trail for other Indians who joined the club of multi-national CEO’s.
When Gupta first joined MCK in 1973, it wasn’t an unusual thing for consultants to make the kind of money investment bankers did.

But, in the 80’s, things changed and banks began selling newer products like junk bonds and in a few years bankers were pulling in millions. Gupta personified the generation of Indians who were called the “twice blessed” — those who profited from India’s independence in 1947 and overturning of a United States law in 1965 that had restricted Indian immigration to around 100 people each year.
Under his service, McKinsey became a global powerhouse opening close to 20 offices and doubling their consultants.
But the question in everyone’s mind is, why had someone as hard-working and successful as Rajat Gupta risked — and now completely lost — everything in order to participate in an illegal task in which he saw no material benefit?
What were the factors that were under his control and which were not?
Some people who are used to taking decisions quickly at times do not reflect whether the information they are receiving is taking them close to the line between permissible trade and security

fraud.

 Did Rajat Gupta do it for the money? For someone who was worth a few hundred million in the company and moved around with billionaires and not feeling up to the mark, maybe.
One of the plausible reasons for charges against these people with such stature and wealth is that insider trading makes very little sense to them. There was no reason for him to leak confidential information. He didn’t need money, prestige or any favour. It was darker than ambition or greed. It was close to sociopathic narcissism- a belief that Gupta was above the law, immune to the rules governing us.
 Another thing is whether it was an error judgment that was brought along by the adrenaline rush. Gupta had been McKinsey’s Pretorian Guard, extremely important but equally invisible and behind the scenes. Was there an urge to do something more exciting? The hard-working Indian who hung around with the glamorous bankers found the temptations too much. Did the good kid from the minority start finding his life boring?

To sum it up, he was motivated not by rapid profits but rather a kind of lifestyle where inside tips form the currency of friendships and elite high profile business relationships.