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New Insider Trading Case Reaches Into 'Iconic Corporate America'

The news this morning that "a prominent former Goldman Sachs board member" has surrendered to federal authorities in New York City "to face criminal charges stemming from a massive hedge fund insider trading case" (as the AP writes), takes the federal investigation into new territory, New York Times reporter Azam Ahmed said earlier today on Morning Edition.

With Rajat Gupta facing charges stemming from the case involving convicted Galleon Group hedge fund manager Raj Rajaratnam, it moves the story "into the world of iconic corporate America," said Ahmed, who writes for the Times' Deal Book blog.

Up to now, Ahmed said, those ensnared in the investigation have been "traders [and] analysts; people in the world of Wall Street."

But Gupta was the "longtime head of McKinsey & Company, the elite consulting firm," as Deal Book says. He was, Ahmed adds, "an adviser to the corporate elite." Gupta has also been, according to Deal Book, a special adviser to the United Nations.

It's been alleged, as The Associated Press says, that Gupta "passed along privileged financial information that helped enrich ... Rajaratnam, a former billionaire hedge fund manager who was the prime target of the criminal probe."

Gupta's lawyer, the AP adds, has said his client is innocent and that such allegations are "premised in large part on unreliable evidence being used in an attempt to bring down a man of sterling reputation and remarkable achievements."

The Sri Lanka-born Rajaratnam was sentenced earlier this month to 11 years in prison and fined $10 million. Prosecutors said he made profits and avoided losses totaling more than $60 million thanks to tips he got from corporate insiders.

Gupta, the AP says, is Indian-born and Harvard-educated.

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Mark Memmott is NPR's supervising senior editor for Standards & Practices. In that role, he's a resource for NPR's journalists – helping them raise the right questions as they do their work and uphold the organization's standards.