On Wednesday, a securities fraud indictment was unsealed against former Goldman Sachs and Proctor & Gamble board member Rajat Gupta.

According to the indictment, Gupta engaged in insider trader with business associate Ram Rajaratnam.

Gupta allegedly provided Rajaratnam with confidential information regarding Goldman Sachs and Procter & Gamble investments between 2008 and 2009, knowing that his business associate would use the information to avoid losses and to increase financial gains.

Evidence was presented at Rajaratnam's trial that Gupta used his position as a board member at Goldman to assist him in avoiding major losses. Gupta also allegedly provided Rajaratnam with information that allowed him to earn almost $1 million through another transaction.

Gupta currently awaits arraignment on one count of conspiracy to commit securities fraud and five counts of securities fraud. Altogether, the charges carry a maximum sentence of 105 years. Gupta also faces civil charges brought by the Securities and Exchange Commission.

Gupta's arrest is, according to the FBI, the latest in a long effort that began in 2007 to crack down on hedge fund investors who engage in illegal activity. The crackdown is considered to be the largest in U.S. history.

Rajaratnam, who is apparently considered to be a central figure in the securities crackdown, was arrested in October 2009 and convicted of conspiracy and securities fraud this May. Earlier this month, he was sentenced to 11 years in prison, the longest prison term for insider trading in U.S. history. In addition to his prison term, he was ordered to forfeit $53.8 million and pay a $10 million fine.

Gupta's attorney argues that the fraud allegations are "baseless" and that his communications with Rajaratnam were permissible.

Source: The Economic Times, "US SEC charges Rajat Gupta with fraud and conspiracy," October 28, 2011.