Gupta Steps Down from P&G Board

(Rajat Gupta stepping down from P&G board report updated with comment from Gupta's counsel.)
CINCINNATI (TheStreet) -- Procter & Gamble(PG) board member Rajat Gupta stepped down from the board Tuesday following allegations that the former director of Goldman Sachs(GS) provided inside information to Raj Rajaratnam, a hedge fund manager for Galleon Group.

P&G said Gupta vigorously denied the allegations but decided to step down from the board to avoid distractions to the operations of P&G.

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"We received the SEC order containing the allegations against Mr. Gupta this morning," P&G spokesman Paul Fox said. Gupta "has vigorously denied the SEC accusations that are being leveled at him and is stepping down in the interests of the company, to prevent any distraction to the P&G board and our business."

In an email to TheStreet, Gupta's counsel Gary Naftalis said that "The SEC's allegations are totally baseless. Mr. Gupta's 40-year record of ethical conduct, integrity, and commitment to guarding his clients' confidences is beyond reproach. Mr. Gupta has done nothing wrong and is confident that these unfounded allegations will be rejected by any fair and impartial fact finder. There is no allegation that Mr. Gupta traded in any of these securities or shared in any profits as part of any quid pro quo. In fact, Mr. Gupta had lost his entire $10 million investment in the GB Voyager Fund managed by Rajaratnam at the time of these events, negating any motive to deviate from a lifetime of honesty and integrity."

Gupta allegedly gave Rajaratnam information about quarterly earnings at Goldman Sachs and P&G, and informed him of the $5 billion investment Berkshire Hathaway(BRK.B) made in Goldman in September of 2008, according to the charges.

The SEC has charged Rajaratnam and others in a insider trading scheme. Several have pled guilty to the charges. Rajaratnam heads to court on March 8, 2011.

P&G shares were 0.4% lower at $62.81 in afternoon trading.

-- Written by Miriam Marcus Reimer in New York.

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