Former Goldman Sachs board member Rajat Gupta has been convicted of illegally tipping a hedge-fund manager friend with secrets about the US investment bank, a major victory for prosecutors seeking to root out insider trading on Wall Street.

A Manhattan federal-court jury on Friday found Gupta guilty of three counts of securities fraud and one count of conspiracy, ending the four-week trial.

He was found not guilty on two other securities fraud charges. The jury delivered the verdict on the second day of its deliberations.

US District Judge Jed Rakoff has set sentencing for October 18.

The verdict marks a stunning fall for Gupta, who is also a former top executive at business consulting firm McKinsey & Co and a former director of Procter & Gamble.

"Rajat Gupta once stood at the apex of the international business community," chief Manhattan prosecutor Preet Bharara said in a statement.

"Today, he stands convicted of securities fraud. He achieved remarkable success and stature, but he threw it all away.

"Having fallen from respected insider to convicted inside trader, Mr Gupta has now exchanged the lofty board room for the prospect of a lowly jail cell."

US crackdown

Gupta's friend and one-time associate Raj Rajaratnam, who was convicted of 14 counts of insider trading at a trial last year, is now serving an 11-year prison term.

Since being implicated in the Rajaratnam case more than a year ago, Gupta has denied the charges and vowed to put on a vigorous defence.

At trial, his lawyers argued that prosecutors "had no real, hard, direct evidence" against Gupta, who did not take the witness stand.

The US government crackdown on insider trading has led to guilty verdicts or plea bargains of scores of executives,
lawyers and financial consultants.

Source: Agencies