Compliancex

Former Goldman Sachs director Rajat Gupta surrendered to the Federal Bureau of Investigation Wednesday on insider trading charges, the New York Times’ Dealbook blog reports. He was then arrested.

The Times says that a Manhattan federal jury indicted him for “one count of conspiracy to commit securities fraud and five counts of securities fraud, all related to tips on Goldman Sachs in 2008.” Business Insider calls Gupta, who also was an executive for McKinsey, the highest-ranking banking official to be criminally charged with insider trading.

The case against Gupta is reportedly related to his dealings with Galleon Group co-founder Raj Rajaratnam, Reuters notes. Rajaratnam has been sentenced to 11 years in the pokey on insider trader charges. The Securities and Exchange Commission filed civil charges against Gupta in March, and then later dismissed the case after he countersued. The SEC was expected to sue him in federal court in New York, but instead, Gupta now faces criminal charges that could potentially put him behind bars. The SEC has now “ filed a complaint against Mr. Gupta and Mr. Rajaratnam” on Wednesday,  the New York Times notes, “alleging an ‘extensive insider trading scheme.’”

U.S. Attorney Preet Bharara, who is prosecuting the case, said in a statement, “Rajat Gupta was entrusted by some of the premier institutions of American business to sit inside their boardrooms, among their executives and directors, and receive their confidential information so that he could give advice and counsel for the benefit of their shareholders.” Bharara said that Gupta allegedly “broke that trust and instead became the illegal eyes and ears in the boardroom for his friend and business associate, Raj Rajaratnam, who reaped enormous profits from Mr. Gupta’s breach of duty.”

When Reuters asked Gupta’s lawyer about the situation Tuesday night, he said, “Any allegation that Rajat Gupta engaged in any unlawful conduct is totally baseless.” Naftalis said that “The facts demonstrate that Mr. Gupta is an innocent man and that he has always acted with honesty and integrity. He did not trade in any securities, did not tip Mr. Rajaratnam so he could trade, and did not share in any profits as part of any quid pro quo.”

The Times says that with Gupta’s arrest, the feds are “tying up one of the biggest loose ends resulting from the investigation into the Galleon Group.” The probe has been going on for the last five years, with 56 people charged, and 51 convicted so far.

Lisa Swan, a former senior new media editor at the New York Daily News, is a columnist for The Faster Times and a blogger for Subway Squawkers. Her work has also appeared in Yahoo Sports, Huffington Post, Heater Magazine, and the upcoming book Graphical Player 2011.