Former Goldman Sachs director Rajat Gupta surrendered to the FBI Wednesday on criminal charges he engaged in illegal insider trading.
Gupta faces six counts, in part from allegedly leaking confidential board information at Goldman to his hedge fund billionaire friend Raj Rajaratnam. Rajaratnam has already been convicted and was sentenced to 11 years in prison in one of the toughest insider-trading penalties ever.
FBI officials said that within seconds of learning non-public information that Warren Buffett's Berkshire Hathaway was going to invest billions in Goldman, Gupta called Rajaratnam so his Galleon fund could buy shares.
"That information [captured by the FBI] was conveyed by phone so quickly it could be termed instant messaging," said FBI New York Director Janice Fedarcyk.
Prosecutors said Gupta also leaked inside information when he was at Proctor & Gamble.
U.S. attorney Preet Bharara said Gupta violated the trust corporate leaders placed in him as they sought his confidential business advice.
"Today we allege that the corruption we have seen in the trading cubicles, investment firms, law firms, expert consulting firms, medical labs, and corporate suites also insinuated itself into the boardrooms of elite companies," Bharara said.
Gupta's lawyer has said his client denies any wrongdoing and claims he actually lost money in connection with the deals outlined by the federal authorities.
The Securities and Exchange Commission re-filed civil charges against Gupta Wednesday after having dropped them earlier in the investigation.
Gupta's alleged crimes stretched from 2008 to 2009, officials said. The FBI said wiretap recordings detailed the alleged schemes.
More than 50 brokers and consultants have been convicted in recent months on insider trading counts. Bharara has called the crime "rampant" on Wall Street.
Gupta is expected to be arraigned on the insider trading counts later Wednesday. He faces up to 20 years behind bars if convicted.