Insider trading is the trading of a corporation’s stock or other securities (e.g. bonds or stock options) by individuals with access to non-public information about the company.
In the United States corporate insiders are defined as a company’s officers, directors and any beneficial owners of more than ten percent of a class of the company’s equity securities.
Trades made by these types of insiders in the company’s own stock, based on material non-public information, are considered to be fraudulent since the insiders are violating the fiduciary duty that they owe to the shareholders
Rajat  Gupta was charged  for insider trading with billionaire and Galleon Group hedge fund founder Raj Rajaratnam. He provided important non-public Financial information to Raj Ratnam which caused profits to the scale of millions.  He was arrested in New York City by the FBI and pleaded not guilty. He was released on $10 million bail on the same day.
Acording to US Security and Exchange Commission, , “The tips generated ‘illicit profits and loss avoidance’ of more than $23 million.” Manhattan U.S. Attorney Preet Bharara said, “Rajat Gupta was entrusted by some of the premier institutions of American business to sit inside their boardrooms, among theirexecutives and directors, and receive their confidential information so that he could give advice and counsel.”
In April 2012, another charge relating to passing P&G information was added by the prosecution
The current case is focusing on the relationship between Raj Rajaratnam, Anil Kumar and Gupta.  Gupta, Rajaratnam, and Kumar were all involved to varying degrees as founding partners of private-equity firms Taj Capital and New Silk Route, though Rajaratnam and Kumar left before they began operation. Gupta remained as chairman of New Silk Route, and Rajaratnam eventually invested $50 million in the fund.Â
Rajat Gupta’s trial began on May 21, 2012.   On June 15, 2012, Gupta was found guilty on three counts of securities fraud and one count of conspiracy. He was found not guilty on two other securities fraud charges. At the time, his lawyer told reporters, “We will be moving to set aside the verdict and will, if necessary, appeal the conviction.”
The maximum sentence for securities fraud is 20 years and the maximum sentence for conspiracy is five years.  In arguments in mid-October, prosecutors favored prison time of up to 10 years while defense attorneys favored probation and community service.
As one service option, the latter suggested Gupta “work on health care and agriculture in rural Rwanda”. Prosecutors based their recommendation in part on $11.2 million profits, or losses avoided, by Rajaratnam based on the tips. The defense argued Gupta “never profited on the alleged trading” per one news account.
On October 24, 2012, Gupta was sentenced to two years in prison by Judge Rakoff of United States District Court in Manhattan handed for leaking boardroom secrets to the former hedge fund manager Raj Rajaratnam