CORRECTED – UPDATE 1-Goldman Sachs director in Galleon probe – WSJ

(Corrects paragraph 14 to make clear the allegation is that
Kumar, not McKinsey, made $600,000)

* Gov’t examining whether Gupta shared inside info – WSJ

* Gupta spokeswoman says he has done nothing wrong

* Former McKinsey head close to Rajaratnam – WSJ
(Updates to add statement from McKinsey, additional
background)

NEW YORK, April 15 (BestGrowthStock) – Prosecutors are examining
whether Goldman Sachs Group Inc (GS.N: ) director Rajat Gupta
gave inside information about the Wall Street bank to Galleon
Group hedge fund founder Raj Rajaratnam, the Wall Street
Journal said on Thursday, citing people close to the
situation.

“Mr. Gupta is unaware of any examination of any such issue
and has done nothing wrong,” a spokeswoman for Gupta said in a
statement responding to the report.

Rajaratnam has pleaded not guilty to criminal insider
trading charges. He faces a related civil lawsuit by the U.S.
Securities and Exchange Commission.

In a March 22 letter made public last week, the government
said it was examining trades by Rajaratnam and others in shares
of several companies, as part of a wide-ranging insider trading
probe.

Among these companies was Goldman, where trades between
June 2008 and October 2008 were being examined. The bank’s
shares traded between $74 and $187 over that time.

Citing the people close to the situation, the Journal said
the government was examining whether Gupta had shared inside
information about Goldman, and whether he had given it to
Rajaratnam during the height of the financial crisis.

It characterized Gupta, who used to run consultancy
McKinsey & Co, as a close associate of Rajaratnam.

A McKinsey spokeswoman declined to comment, but said in a
statement that McKinsey has “no knowledge of this alleged
matter, which is unrelated to our firm.”

Spokesmen for Goldman and Rajaratnam declined to comment.

In late September 2008, Goldman won a $5 billion investment
from Warren Buffett’s Berkshire Hathaway Inc (BRKa.N: )
(BRKb.N: ).

Goldman said last month that Gupta was not standing for
re-election to its board.

This is not the first time that someone who worked for
McKinsey has surfaced in the Galleon investigation.

In January, former McKinsey director Anil Kumar — charged
by prosecutors with providing Rajaratnam with confidential
information about a number of public companies with which
McKinsey was working — pleaded guilty to securities fraud
charges. Prosecutors charged that over a five-year period,
Rajaratnam paid Kumar up to $2 million for the stock tips.

Authorities also contend that Kumar made an additional
$600,000 over the years by reinvesting some of the money
Rajaratnam paid him in account with Galleon.

In all, prosecutors contend they have evidence that Kumar
provided Rajaratnam with confidential information about five
companies that were McKinsey clients, including Business
Objects, Spansion Inc (SPSNQ.PK: ) and Advanced Micro Devices Inc
(AMD.N: ).

The Journal previously had reported that Kumar had a close
relationship with Gupta.

Kumar’s lawyer, Robert Morvillo, wasn’t available for
comment.

Investment Analysis
(Reporting by Steve Eder, Jonathan Stempel and Mathew
Goldstein; Editing by Ted Kerr and Gerald E. McCormick)

CORRECTED – UPDATE 1-Goldman Sachs director in Galleon probe – WSJ