Insider trading is the trading of a corporation's stock or other securities (such as bonds or stock options) by individuals with access

to non-public information about the company. In most countries, trading by corporate insiders such as officers, key employees, directors, and large shareholders may be legal, if this trading is done in a way that does not take advantage of non-public information. However, the term is frequently used to refer to a practice in which an insider or a related party trades based on material non-public information obtained during the performance of the insider's duties at the corporation, or otherwise in breach of a fiduciary or other relationship of trust and confidence or where the non-public information was misappropriated from the company. Tipping is included under the umbrella of insider trading if inside information is revealed to outside individuals in order to enable said individuals to trade in the securities based on undisclosed information. All those who come into possession of material inside information before it is publicly released are considered insiders. This includes control stockholders, directors, officers, employees, and others. The company itself is an insider and when it has material inside information, may not legally buy its securities from or sell its securities to the public. Cases of insider trading most frequently involve corporate officers and directors. They are restricted in trading the securities of their own company or are obligated not to disclose any material nonpublic information entrusted to them.

Mr. Gupta, 63, who ran the consulting firm McKinsey & Company and served as a major adviser to the philanthropic efforts of Bill Gates and Bill Clinton A native of Kolkata, India, Mr. Gupta came to the United States to earn a graduate degree at Harvard Business School. He rose swiftly through the ranks of McKinsey and headed the firm for a decade. Mr. Gupta was a trusted adviser to the captains of industry, including Henry R. Kravis of the private equity firm Kohlberg Kravis Roberts & Company and Peter R. Dolan, the former chairman and chief executive of Bristol-Myers Squibb. A noted humanitarian, he has also played a leading role in organizations fighting diseases like AIDS, malaria and tuberculosis in poverty-stricken nations. After his retirement from McKinsey in 2007, Mr. Gupta joined numerous boards and became active on Wall Street. He grew close with Mr. Rajaratnam, the former head of the Galleon Group hedge fund. The two went into business together, starting a private equity firm. Mr. Gupta also invested in Galleon and used his gold-plated Rolodex to raise money for the fund.

It was during that stretch, in 2008, that the government wiretapped Mr. Rajaratnams cellphone and heard Mr. Gupta telling him boardroom gossip about Goldman Sachs. On other calls, Mr. Rajaratnam bragged to his Galleon colleagues about having a tipster inside Goldman.

The recordings turned the governments focus on Mr. Gupta, who was arrested on insider trading charges last October. He is one of 23 people criminally charged in a seven-year insider trading conspiracy orchestrated by Mr. Rajaratnam, who was convicted in 2011. Mr. Gupta also fought the accusations. A jury found Mr. Gupta guilty in May.

Federal prosecutors did not have any direct wiretap evidence of Mr. Gupta passing inside information about Goldman. Instead, the governments case consisted of phone records, trading logs, instant messages and e-mails. In one example, the circumstantial evidence showed that Mr. Gupta participated in a Goldman board call during the financial crisis in which he learned that the billionaire Warren E. Buffett would be making a $5 billion investment in the bank. After the call and before the public announcement of the investment, he quickly called Mr. Rajartanam, who then bought Goldman shares.

The illegal tips about Goldman allowed Mr. Rajaratnam to gain about $5 million, according to the court. Mr. Gupta did not make any trades based on the information; he only passed it along.

So why did Mr. Gupta do it? Judge Rakoff asked on Wednesday, and then speculated on the reason. Having finished his spectacular career at McKinsey in 2007, Gupta, for all his charitable endeavors, may have felt frustrated in not finding new business worlds to conquer; and Rajaratnam, a clever cultivator of persons with information, repeatedly held out prospects of exciting new international business opportunities that Rajaratnam would help fund but that Gupta would lead. His sentence is far less than the 11 years and $92.8 million fine given to Mr. Rajaratnam, who is now in a federal prison in Ayer, Mass. But it is in line with prison terms handed down by Judge Rakoff in other recent insider trading cases. The judge refused Mr. Guptas request to remain free while he appeals his case. Mr. Gupta, who lives in Westport, Conn., must surrender to federal prison authorities by Jan. 8. The federal prison system does not have parole, but he can get a slight reduction in his sentence for good behavior. Judge Rakoff agreed to a request from Mr. Guptas lawyers that he be assigned to a medium-security prison in Otisville, N.Y., though the Federal Bureau of Prisons makes that decision. A very famous quote by legendary value investor Warren Buffett goes thus: "It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently." We were reminded of these lines when we read what former Goldman Sachs director and McKinsey & Company Managing Partner Mr Rajat Gupta said just before being sentenced: "I have lost my reputation that I have built over a lifetime."