Ex-Goldman director Gupta, SEC to drop litigation

NEW YORK (Reuters) - Former Goldman Sachs Group Inc <GS.N> director Rajat Gupta and the U.S. Securities and Exchange Commission have agreed to drop litigation against each other stemming from the government's sprawling insider trading probe, court papers show.

The SEC on March 1 brought administrative proceedings accusing Gupta, a former chief of consulting firm McKinsey & Co, of passing tips to Galleon Group hedge fund founder Raj Rajaratnam about Goldman and Procter & Gamble Co <PG.N>, where he was also a director.

Gupta then sued the SEC in the U.S. District Court in Manhattan, accusing the regulator of violating his rights by bringing administrative proceedings rather than suing him in federal court, thus denying him a jury trial.

The parties agreed to drop their litigation, according to a signed agreement made public on Thursday by U.S. District Judge Jed Rakoff, who presided over Gupta's lawsuit. He said once the agreement's terms are met, Gupta's lawsuit against the SEC will become moot.

(Reporting by Jonathan Stempel; Editing by Tim Dobbyn)