Rajat Gupta, the former head of the elite global consulting firm McKinsey & Co., surrendered himself to the FBI on Wednesday morning, a stunning development not just for his sterling career but also the criminal case the SEC is expected to pursue. Gupta stands accused of spreading financial gossip but not making money off it himself. According to The Wall Street Journal, the core of the prosecution's case against Gupta, who was also a former director of Goldman Sachs, are phone calls to former hedge fund colossus Raj Rajaratnam, who was recently sentenced to 11 years for insider trading. According to The Journal, Gupta would call Rajaratnam minutes after he had heard sensitive information. Prosecutors caught Rajaratnam saying things on tape like, "I heard yesterday from somebody who's on the board of Goldman Sachs that they are going to lose $2 per share. The Street has them making $2.50." This sort of high-level gossip is common in every industry, and especially on rumor-driven Wall Street and the case against Gupta seems to be an attempt to crackdown. As The Journal writes, "The government is expected to argue that the relationship between the two men, who socialized and invested together, is emblematic of the back-scratching that pervades the corporate world and can sometimes veer into insider trading. Gupta's arrest has financial experts thinking about the precedent this case could set.

This type of prosecution could implicate many others, writes Azam Ahmed at The New York Times. He says it would "extend the reach of the government’s inquiry into America’s most prestigious corporate boardrooms. Most of the defendants charged with insider trading over the last two years have plied their trade exclusively on Wall Street."

He was likely motivated by influence rather than greed, writes David Weidner at MarketWatch. He fleshes out the cost-benefit analysis of someone like Gupta sharing this information with Rajaratnam.

For Gupta, there seemed to be little tangible reward. If anything, he put his career, reputation and relationship with Goldman at tremendous risk, as federal charges now confirm.

But for many top players on Wall Street, information is a drug. It’s in demand. Those who have it are tempted to use it. For someone of Gupta’s position, revealing information is part thrill, part ego. Sharing such important information declares that Gupta is a player. To do so with the risks involved suggest Gupta, like many top executives who trade information, reflects a hubris of someone who has never been caught and thinks they’re too smart to get caught.

This gives you a sense of where the SEC is headed Yves Smith at Naked Capitalism, a vociferous critic of the SEC, gives the agency credit for its aggressive tactic here. But notes that this comes at the expense of prosecuting other Wall Street malfeasance.  "Regardless of whether the legal argument is a bit aggressive or not, notice that the SEC is moving boldly on these cases when it has sorely neglected other beats. Let’s face it: insider trading cases are comparatively easy to prove, and the SEC likes to go after low hanging fruit."