Rajat Gupta, a former board member of Goldman Sachs and Proctor & Gamble, had a securities fraud indictment unsealed against on Wednesday. The indictment reportedly accuses Gupta of defrauding the securities market through insider trading, along with Ram Rajaratnam , a hedge fund founder who has already been convicted of conspiracy and securities fraud.

The indictment reportedly alleges that Gupta disseminated confidential information to Rajaratnam concerning Goldman Sachs and Procter & Gamble between 2008 and January 2009, and had knowledge that Rajaratnam would use the information to purchase stock. Gupta is currently awaiting an arraignment on one count of conspiracy to commit securities fraud as well as five counts of securities fraud. Together, the charges could land him a prison sentence of 105 years.

According to an FBI spokeswoman, Gupta’s arrest was only the latest in an ongoing effort to track down hedge fund fraudsters. That effort was initiated by the FBI in 2007.

According to Gupta’s attorney, the allegations are “totally baseless” and Gupta only engaged in permissible communications with his business associate. The allegations, according to his lawyer, are based almost totally on circumstantial evidence.

At the trial of Gupta’s business associate Ram Rajaratnam, evidence was presented that, 23 seconds after a 2008 Goldman board meeting in which members were informed that the investment bank sustained a quarterly loss for the first time since going public in 1999, Gupta called Rajaratnam on the phone. The next morning, Rajaratnam sold his entire position in Goldman Sachs, allowing him to save millions of dollars of losses. Gupta also provided information that allowed Rajaratnam to earn nearly $1 million in another transaction.

Sources said that, on Wednesday, the Securities and Exchange Commission has brought civil charges against Gupta.

Source: CBS News, “Ex-Goldman director indicted in fraud case,” October 26, 2011.