Rajat Gupta sues New Silk Road’s Parag Saxena

Gupta claims Saxena is trying to gain control of NSR.

By American Bazaar Staff

Former Goldman Sachs Group Inc. director and convicted insider trader Rajat Gupta has accused the CEO of the $1.4 billion private equity firm he co-founded of wrongfully trying to take control of the company by thwarting Gupta’s chosen successors.

Gupta, who stepped down as a member of the New Silk Road LLC in February 2012, claims in New York federal court that CEO Parag Saxena is delaying the appointment of Gupta’s hand-picked successor on the company board in “a bad faith effort to gain complete and unfettered control over NSR,” reported Law360.

“Permitting an insider to gain unfettered control of a corporation exposes the company’s outside shareholder to the potential of great harm,” the suit said.

Gupta stepped down from the NSR board to distance the company from the federal insider trading charges for which Gupta was found guilty in June, according to the complaint.

Gupta transferred the voting shares to Saxena after the pair reached an agreement that NSR manager Anil Sood would assume Gupta’s previous role at the company, the complaint says.

But Saxena later told Gupta of his intention to seek Sood’s resignation without first obtaining a shareholder vote, according to the complaint, reported Law360.

Saxena also refused a request from another Gupta-picked successor, company principal Herbert Henzler, that the company offer him directors’ and officers’ insurance, a move that Gupta claims was designed to thwart Henzler’s ascension to the company board.

“By refusing to exercise his power as a shareholder of the company to cause director and officer insurance to be obtained and thereby trying to thwart the appointment or election of Henzler, Saxena breached the covenant of good faith and fair dealing inherent in the voting agreement,” the complaint said.

Gupta asked the court for an injunction requiring Saxena to place a Gupta-designated executive on the company’s board of directors.

Gupta was convicted in June and sentenced to two years in prison in October for allegedly tipping hedge fund giant Raj Rajaratnam with inside information obtained from his service on the boards of Goldman Sachs and Procter & Gamble Co. Rajaratnam is serving an 11-year prison sentence on insider trading charges.

Gupta remains free on bail pending his appeal before the Second Circuit. NSR is an Asia-focused private equity fund founded in 2006 with $1.4 billion under management, according to information on the company’s website. It focuses on the Indian subcontinent and other economies in Asia and the Middle East, the company said.

Leave a Comment

Your email address will not be published. Required fields are marked *

*

This site uses Akismet to reduce spam. Learn how your comment data is processed.