New Silk Route's Rajat Gupta sues co-founder
Rajat Gupta, the former Goldman Sachs director who was convicted last year of insider trading, is taking legal action against his co-founder of private equity firm New Silk Route (NSR), claiming breach of contract.
According to Gupta's complaint filed in federal court in Manhattan, he agreed to step down from the NSR board in February 2012, transferring his voting shares to Parag Saxena, the private equity firm's co-founder and current CEO. Gupta said he wanted to distance himself from NSR while the insider trading charges were still pending.
The complaint states that Saxena subsequently breached an agreement with Gupta by improperly removing his designee to the board, Anil Sood. Saxena is then alleged to have prevented NSR from acquiring director and officer insurance in order to block Gupta's proposal that Sood be replaced by Herbert Henzler. As a condition of his appointment, Henzler said he wouldn't accept legal liability unless covered by insurance for NSR's pass and current activities.
NSR, which is currently managing a fund worth $1.38 billion, predominantly targeting investments in India, said in a statement that the lawsuit is without merit, Bloomberg reported.
"Since Mr. Gupta's conviction of conspiracy and securities fraud in June of 2012, the firm has been actively working to sever all ties with him including offering to buy his remaining investment stake," it said. "New Silk Route's team of over 25 professionals continues to focus on the business and remains excited about opportunities in Asia and India and realizing value from its existing portfolio of investments for its investors and stakeholders."
Gupta, a former managing director of McKinsey & Company who sat on the boards of Goldman Sachs and Procter & Gamble, was convicted in June 2012 of passing privileged information to Galleon Group's Raj Rajaratnam.
Rajaratnam was arrested in 2009 and sentenced to 11 years in prison in 2011. Gupta, who took voluntary leave of absence from NSR in 2011, received a two-year sentence and is currently free, pending his appeal.
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