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SEC's timeline in alleged insider trading

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The Associated Press
Tuesday, March 1, 2011; 5:43 PM

WASHINGTON -- The Securities and Exchange Commission has charged a former Goldman Sachs board member, Rajat Gupta, with illegal insider trading. The SEC says Gupta passed confidential information about major investment bank Goldman Sachs and big consumer products maker Procter & Gamble to Raj Rajaratnam, the central figure in a major hedge fund probe.

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Here's a timeline of events according to the SEC's order against Gupta:

-June 10, 2008: Goldman CEO Lloyd Blankfein calls Gupta and other directors that evening to inform them of Goldman's strong earnings for the quarter ending May 30.

Gupta later call Rajaratnam's home. .

-June 11: Rajaratnam makes another call to Gupta before the market opens. After the market opens, Rajaratnam directs Galleon Tech funds' to buy more than 5,500 contracts that are worthless unless the stock hits $170. Goldman shares had opened trading at $167. Rajaratnam also buys more than 350,000 of straight Goldman shares over the next two days.

-June 16: Goldman issues a positive earnings preview for the quarter, sending the stock price up more than 2 percent. Sometime after, Rajaratnam sells the 5,500 contracts. Profit: around $7 million.

-June 17: Goldman announces its quarterly earnings before the market opens; they beat analysts' estimates. Shares open at $185.04, up 1.6 percent from the close the day before. After the announcement, Rajaratnam sells the funds' shares purchased after he got the confidential information from Gupta on June 10. Profit: around $6.6 million.

-Sept. 21: Wall Street is reeling from the failure of big investment bank Lehman Brothers six days earlier. CEO Blankfein tells his firm's board of a possible rescue investment by billionaire investor Warren Buffett's Berkshire Hathaway. Over the next two days, Rajaratnam has the Galleon Tech funds buy 120,000 Goldman shares. He picks up a third of those shares while on the phone with Gupta.

-Sept. 23: 3:15 p.m.: Goldman's board has a special meeting by telephone. The directors consider and approve a $5 billion investment by Berkshire and a $2.5 billion public offering of Goldman stock.

Around 3:53 p.m.: Gupta disconnects from the call. Immediately, he calls Rajaratnam from the same line. Less than a minute after their conversation - and just minutes before the 4 p.m. market close - Rajaratnam snaps up another 175,000 Goldman shares. Goldman shares close at $125.05.

After the market close: Goldman publicly announces the Berkshire investment and the public stock offering.

-Sept. 24: Goldman shares open at $128.44 and climb to a closing price of $133, up 6.4 percent from the day before. Rajaratnam sells the funds' Goldman shares that were purchased the day before and makes more than $900,000 in profit.

-Oct. 23: Blankfein, Goldman Chief Financial Officer David Viniar and other top executives have a call with the board, bringing directors up to speed about the firm's financial status for the quarter that would end Nov. 28. At that point, Goldman would be operating at a loss of $1.96 a share.

Gupta gets off the call. He calls Rajaratnam 23 seconds later.

-Oct. 24: At the market open, Rajaratnam has the funds begin selling their holdings of Goldman stock, more than 120,000 shares. They're sold at between $97.74 and $102.17 a share. As a result, the funds avoid losses of about $3 million.

-Jan. 29, 2009: The audit committee of Procter & Gamble's board has a telephone meeting to discuss the planned release of financial results for the past quarter. Gupta's on the call. A draft of the release was mailed to committee members two days earlier. It says P&G expects sales from pre-existing business lines to grow 2 percent to 5 percent in the fiscal year, below the 4 percent to 6 percent range the company had previously predicted.

Early afternoon: Gupta calls Rajaratnam.

Late afternoon: Galleon funds sell short about 180,000 P&G shares.

-Jan. 30: Procter & Gamble releases its earnings before the market opens. Its shares open at $56.50, down from the previous day's close of $58.22. They fall to $54.50 at the close. The Galleon funds reap profit of about $570,000 from the short sales.



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