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The Securities and Exchange Commission has filed civil charges against a former director of Goldman Sachs and Procter & Gamble, accusing him of passing illegal tips about those companies to Raj Rajaratnam, the hedge fund manager set to go on trial next week for insider trading. Rajat K. Gupta, former Goldman director, is the highest-profile business executive charged by the government in its sweeping investigation into insider trading on Wall Street.

1. The article mentions that Goldman has had three run-ins with the Securities and Exchange Commission in the past year. What were they? Research and discuss.

2. What is the difference between civil and criminal charges? Why do you think Raj Rajaratnam is facing criminal charges and Rajat K. Gupta is being charged with civil charges?

3. What do they mean by “loss avoidance” for Galleon funds?


Lattman, P. and J. Cane (2011). Former Goldman Director Charged With Insider Trading, Deal Book, March 1 (Retrieved online at

Bloomberg Video. (2011). SEC Says Ex-Goldman Director Gupta Tipped Rajaratnam, March 1 (Retrieved online at