The IIT-D and HBS grad-Rajat Gupta is a professional consulting legend for having reached the pinnacle at McKinsey. After that, he had founded a PE fund New Silk Route which has several investments in India. His independent directorships at the most esteemed organizations-P&G and Goldman Sachs, indicate the high esteem that his peers held him in. Given that, the SEC charge against him for 'tipping' was a shocker, considering that he had no financial reason to do so.
The SEC press release(available here) is damming. While a lot of other evidence can be dismissed as circumstantial, this accusation is hard to defend(para 18)' A Special Telephonic Meeting of the Goldman Sachs Board was convened at 3:15 p.m. on September 23, during which the Board considered and approved a $5 billion preferred stock investment by Berkshire in Goldman Sachs and a public equity offering. Immediately after disconnecting from the Board call, Gupta called Rajaratnam from the same line. Within a minute after this telephone conversation, at 3:56 p.m. and 3:57 p.m., and just minutes before the close of the markets, Rajaratnam caused the Galleon Tech funds to purchase more than 175,000 additional Goldman Sachs shares'(emphasis added)
The financial gains were non insubstantial(around $16MM) but were they enough to cover the reputation risk for Mr Gupta? As a consultant, keeping confidential information secret is must. The SEC release has effectively brought his consulting career to a close. Maybe he thought that he would not be caught but the long fishing net of the SEC caught even this large fish. The takeaway is that in this digital world, there is a permanent record of one's actions which may rebound later. So either be upright, or take immense precautions to escape.