Pressure mounts on ISB board to take a call on Rajat Gupta

According to a CEO,who is part of the executive board,members have been talking between themselves about the SEC’s charges. “We have not come to a point of calling a meeting of the executive board. But the issue is being discussed,” the CEO told The Indian Express. Another CEO,also a member of the board,said it was premature to talk about Gupta’s ouster.

In October 2009,one of the six accused in the Galleon insider trading case,McKinsey Director Anil Kumar,was asked to step down voluntarily from the ISB board. The decision was taken then too by the executive board chaired by Rajat Gupta.

In a press statement issued on March 1,SEC announced insider trading charges against Rajat Gupta for tipping Galleon Management founder and hedge fund manager Raj Rajaratnam with insider information about the quarterly earnings at Goldman Sachs and Procter & Gamble. Gupta served as a board member in both these companies.

“The SEC’s Division of Enforcement alleges that Gupta,a friend and business associate of Rajaratnam,provided him with confidential information learned during board calls and in other aspects of his duties on the Goldman and P&G boards…The insider trading by Rajaratnam and others generated more than $18 million in illicit profits and loss avoidance. Gupta was at the time a direct or indirect investor in at least some of these Galleon hedge funds,and had other potentially lucrative business interests with Rajaratnam,” the SEC statement said.

An ISB spokesperson said he had no information if a meeting of the executive board was being called for to discuss this issue. “We note the statement of the counsel for Rajat Gupta,which asserts that the allegations are totally baseless. The ISB community is confident that Rajat Gupta will be vindicated. He continues to be the Chairman of the ISB Executive Board,” the ISB statement issued today said.