Lucas Jackson/Reuters

Rajat K. Gupta, the retired head of the consulting firm McKinsey & Company and a former Goldman Sachs board member, was found guilty on Friday of conspiracy and securities fraud for leaking boardroom secrets to a billionaire hedge fund manager.

He is the most prominent corporate executive convicted in the government’s sweeping investigation into insider trading.

The case, which caps a wave of successful insider trading prosecutions over the last three years, is a significant victory for the government, which has penetrated some of Wall Street’s most vaunted hedge funds and reached into America’s most prestigious corporate boardrooms.

It also demonstrated that prosecutors could win an insider trading case largely built on circumstantial evidence like phone records and trading logs. Previous convictions, as in the trial of Raj Rajaratnam, the hedge fund manager on the receiving end of Mr. Gupta’s assumed tips, have relied more heavily on the use of incriminating wiretaps.

Mr. Gupta is one of the 66 Wall Street traders and corporate executives charged with insider trading crimes by Preet Bharara, the United States attorney in Manhattan, since 2009. Of those, 60 have either pleaded guilty or been found guilty. Juries have convicted all seven defendants who have gone to trial.





After a monthlong trial in Federal District Court in Manhattan, a jury took only two days to reach a verdict. It found Mr. Gupta guilty of leaking confidential information about Goldman to his former friend and business associate, Mr. Rajaratnam, on three different occasions in 2008. He was also convicted on a conspiracy charge.

The jury found Mr. Gupta not guilty of two charges of tipping Mr. Rajaratnam, including an allegation that he divulged secret news about Procter & Gamble, where he also served on the board.

“Having fallen from respected insider to convicted inside trader, Mr. Gupta has now exchanged the lofty boardroom for the prospect of a lowly jail cell,” Mr. Bharara said in a statement.

After the verdict was read in the courtroom, Mr. Gupta, 63, remained stoic. Just behind him, his wife, Anita, buried her head in her hands. His four daughters, who had squeezed into the front row of the spectators’ gallery each day during the trial, loudly sobbed and consoled one another. Several jurors cried as they left the courtroom.

Gary P. Naftalis, a lawyer for Mr. Gupta, said that his client would appeal the verdict. “This is only Round 1,” he said.

Judge Jed S. Rakoff, who presided over the case, set Mr. Gupta free on bail until his Oct. 18 sentencing. He faces a maximum sentence of 25 years in prison, but will probably serve less time. Mr. Rajaratnam is serving an 11-year jail term.

With its crackdown on insider trading, the government wants to protect investors, sending the message that the stock market is a level playing field and not a rigged game favoring Wall Street professionals. Insider trading, in the government’s view, also victimizes the companies whose information is stolen.

The criminal charges against Mr. Gupta, brought last October, stunned the global business world. Not since last decade’s corporate crime spree, when Jeffrey K. Skilling of Enron and Bernard J. Ebbers of WorldCom received lengthy prison terms, or the Wall Street scandals of the late 1980s that led to jail time for the financiers Michael R. Milken and Ivan F. Boesky, had a corporate executive fallen from such heights.

Mr. Gupta, a native of Kolkata, India, was orphaned as a teenager. After earning an engineering degree, he moved to the United States to attend Harvard Business School on a scholarship. He joined McKinsey in the early 1970s and in 1994 was elected global head, the first non-American-born executive to hold that post.

In 2007, Mr. Gupta retired from McKinsey and became a highly sought director at public companies, joining the boards of Goldman, Procter & Gamble and the parent company of American Airlines. In recent years, Mr. Gupta had also devoted his time to humanitarian causes, raising millions of dollars to combat AIDS, tuberculosis and malaria.

“Having lived a lifetime of honesty and integrity, he didn’t turn into a criminal in the seventh decade of an otherwise praiseworthy life,” said Mr. Naftalis, articulating one of Mr. Gupta’s defenses.

Yet the government, which was represented by federal prosecutors Reed Brodsky and Richard C. Tarlowe, countered with evidence that Mr. Gupta brazenly divulged confidential board discussions at both Goldman and Procter & Gamble.

“Here’s a man who came to this country and was a wonderful example of the American dream,” said the jury’s foreman, Richard Lepkowski, an executive for a nonprofit organization. “We wanted to believe that the allegations weren’t true, but at the end of the day the evidence was just overwhelming.”

Prosecutors built their case around phone records, trading logs, instant messages and e-mails. Mr. Gupta would participate in Goldman board calls, and afterward quickly call Mr. Rajaratnam, the founder of the Galleon Group. Mr. Rajaratnam would then trade shares in Goldman.

The government also presented three telephone conversations between Mr. Rajaratnam and Galleon colleagues that were secretly recorded by the F.B.I. On those calls, Mr. Rajaratnam boasted that he had a source inside Goldman.

“I heard yesterday from somebody who’s on the board of Goldman Sachs that they are going to lose $2 per share,” Mr. Rajaratnam said on one call, in October 2008.

The defense repeatedly maligned Goldman, suggesting that the close ties between the bank and Galleon meant that there were numerous sources at the bank feeding Mr. Rajaratnam information.

“The wrong man is on trial,” Mr. Naftalis told the jury.

The case has been an embarrassment for the executives at McKinsey, which Mr. Gupta ran from 1994 to 2003. A trusted adviser to top companies, McKinsey counts Sheryl Sandberg, the chief operating officer of Facebook, and James P. Gorman, the chief executive of Morgan Stanley, among its alumni.

“McKinsey’s core business principle is to guard the confidential and private information of its clients,” said a former McKinsey executive, who spoke on the condition of anonymity. “It is mind-blowing that the guy who ran the firm for so many years could be going to jail for violating that principle.”

Mr. Gupta met Mr. Rajaratnam around 2007. Back then, Mr. Rajaratnam was at his peak, a billionaire hedge fund manager with a superior investment record. For Mr. Gupta, who wanted to raise his profile in the lucrative world of money management, Mr. Rajaratnam was a top-notch connection.

“Rajaratnam offered Gupta many benefits,” said the prosecutor, Mr. Tarlowe, in his summation. “What was good for Rajaratnam and Galleon was good for Gupta.”

Together, the men helped start a private equity firm focused on India. Mr. Gupta invested at least $13 million in Galleon hedge funds and took on a fund-raising role at the firm. He accepted a highly paid advisory post at the investment giant Kohlberg Kravis Roberts & Company.

During a telephone conversation between Mr. Rajaratnam and Anil Kumar, a former McKinsey executive who has pleaded guilty to insider trading, the two gossiped about Mr. Gupta’s ambitions to make more money, focusing on his job at Kohlberg Kravis.

“I think he wants to be in that circle,” said Mr. Rajaratnam, in August 2008. “That’s a billionaire circle, right?”

Mr. Gupta’s friends adamantly dispute the notion that he was driven by material gain. At the trial, his private banker at JPMorgan Chase pegged his family’s net worth at $130 million, in addition to his home in Westport, Conn., a waterfront mansion once owned by the retail executive J. C. Penney.

“I don’t know who came up with this business that Rajat had billionaire envy,” said Anil Sood, a childhood friend from India who now lives in Virginia. “He has always been quite content with his wealth.”

But one of the jurors, Ronnie Sesso, a youth advocate at the Administration for Children’s Services in Manhattan, had a different view.

“What did Mr. Gupta get by giving Raj this information?” said Ms. Sesso. “A need for greed.”

William Alden contributed reporting