Former Goldman Sachs Inc. (GS) and Procter & Gamble (PG) director Rajat Gupta pleaded not guilty to six counts of insider trading Wednesday stemming from a multi-year federal investigation into illegal trading on Wall Street.

A federal grand jury in New York charged Gupta with one count of conspiracy to commit securities fraud and five counts of fraud. He faces five years in prison on the conspiracy charge and 20 years on each of the securities fraud charges. He also faces fines of more than $5 million.

Gupta will be released Wednesday on a $10 million bond, secured by his home in Westport, Conn. He was ordered by U.S. District Judge Jed Rakoff to surrender his passport.

Gupta, 62, is the highest-ranking executive to be named in the government's four-year probe. The Kolkata, India-born businessman was also the former head of global consulting firm McKinsey & Co.

Today’s arrest ties him closer to the insider trading case of former Galleon Group founder Raj Rajaratnam, who was sentenced earlier this month to a record 11 years in prison. In a Newsweek interview, Rajaratnam said prosecutors had pushed him to testify against Gupta, offering a guilty charge on one count that would result in as little as five years in prison. Rajaratnam said he refused.

“The facts demonstrate that Mr. Gupta is an innocent man and that he has always acted with honesty and integrity. He did not trade in any securities, did not tip Mr. Rajaratnam so he could trade, and did not share in any profits as part of any quid pro quo,” said Gupta’s attorney Gary Naftalis. He added, “We are confident that any accusations that he did anything improper cannot withstand scrutiny by any fair and impartial factfinder.”

In previous court filings, prosecutors and the Securities Exchange Commission said Gupta gave Rajaratnam private information from a 2008 Goldman board meeting about a $5 billion investment in the bank by Warren Buffett’s Berkshire Hathaway Inc. They also said Gupta tipped Rajaratnam off to Goldman’s first ever quarterly loss as a public company. 

The SEC previously instituted an administrative proceeding against Gupta but later dismissed those proceedings while reserving the right to file an action against Gupta in federal court, which it did today.

According to the SEC complaint, Gupta illegally tipped off Rajaratnam with inside information about the quarterly earnings of both Goldman Sachs and P&G as well as an impending $5 billion investment in Goldman by Berkshire at the height of the financial crisis.

“Gupta was honored with the highest trust of leading public companies, and he betrayed that trust by disclosing their most sensitive and valuable secrets to the disadvantage of investors, shareholders, and fellow directors,” Robert S. Khuzami, Director of the SEC’s Division of Enforcement said in a statement. “Directors who exploit board room confidences for private gain can be certain they will ultimately be held responsible for their illegal actions.”

According to the agency, Rajaratnam, the founder of Galleon hedge fund who was recently convicted of multiple counts of insider trading in other securities stemming from unrelated insider trading schemes, caused various Galleon funds to trade based on Gupta’s inside information, generating illicit profits or loss avoidance of more than $23 million.

Separately, the SEC also filed new insider trading charges against Rajaratnam after first charging him in October 2009.

Gupta’s meteoric rise in the global business scene began in India soon after the country’s independence from Britain. He was a top student and graduated from the prestigious Indian Institute of Technology before moving to the United States in 1971 and attending Harvard Business School. Soon after he joined McKinsey and quickly rose up the ranks. In 1994 he was tapped to lead the consultancy. While at McKinsey, he expanded the company’s global reach by moving into emerging markets like India and China.

In 2010, Gupta stepped down from Goldman. He left P&G’s board in March.