HEDGE funds are often fatefully named. Long-Term Capital Management, a hedge fund that had to be bailed out in 1998, had a notoriously short lifespan. More recently the Galleon Group, a large hedge fund named after an old-fashioned sort of sailing ship, has dramatically sunk. The boss of the fund, Raj Rajaratnam, and 21 other people have been charged in a sweeping insider-trading case that has allegedly led to at least $85m in illicit profits.

On March 1st, the Securities and Exchange Commission (SEC) brought charges against Rajat Gupta (pictured), the former boss of McKinsey, a consultancy. He is the highest profile corporate executive to be ensnared in the case so far, having served as a former board-member of Goldman Sachs, a bank, and, until yesterday, Procter & Gamble, a giant consumer-goods firm.

Mr Gupta was an investor in Galleon and a friend of Mr Rajaratnam, which is why he tipped him off, on multiple occasions, according to the SEC. For example, after Mr Gupta found out about Warren Buffett's $5 billion investment in Goldman Sachs in 2008, he supposedly called Mr Rajaratnam, who bought 175,000 shares in Goldman. All told, Galleon raked in around $15m and avoided losses of around $3m thanks to Mr Gupta's tips, the SEC alleges.

Mr Gupta fiercely denies the charges and vows to fight them. But the allegations will permanently tarnish his reputation, and may cause fallout at the companies he worked. McKinsey, for example, prides itself on advising bosses discreetly, and rarely even divulges its clients' identities. This case against a former boss won't be good for business. Goldman Sachs, already having settled a lawsuit with the SEC last year for allegedly duping clients into buying mortgage-backed securities without enough information, doesn't need to give investors another excuse to question how information flows on Wall Street.

Mr Rajaratnam, who claims innocence despite the guilty pleas some of his colleagues have already put forward, is set to face trial on March 8th. With his day in court so soon, the timing of the SEC's charges against Mr Gupta probably aren't coincidental. The SEC may be trying to scare Mr Rajaratnam into a settlement while also bringing down the ultimate corporate insider. It's one thing to topple a hedge fund manager, but it's quite another to bring down a major figure in corporate America.