Rajat Gupta (63) — former Goldman Sachs Director and McKinsey and Company Managing Partner, convicted of supplying confidential information to jailed hedge fund boss Raj Rajaratnam — received a two-year jail term from U.S. Judge Jed Rakoff, even as one of the most spectacular insider-trading cases on Wall Street since the financial crisis of 2008 drew to a climax. He was also ordered to pay a fine of $5 million. In June 2012, a jury convicted Mr. Gupta on four criminal felony counts of conspiracy and securities fraud related to his passing on material non-public information on Goldman Sachs to Mr. Rajaratnam, who is serving an 11-year jail term.
While some raised eyebrows at the length of the prison term, Judge Rakoff said Mr. Gupta was “a good man,” and that his court “has never encountered a defendant whose prior history suggests such an extraordinary devotion, not only to humanity writ large, but also to individual human beings in their times of need”. Yet he added, “But the history of this country and the history of the world is full of examples of good men who did bad things”.
In a formal statement in court Mr. Gupta said, “The last 18 months have been the most challenging of my life since I lost my parents as a teenager... I regret terribly the impact on my family, friends and institutions that are dear to me.”
Charges specifically stemmed from allegations that Mr. Gupta placed a call to Mr. Rajaratnam after learning that Goldman Sachs had approved a $5-billion investment by Warren Buffett’s Berkshire Hathaway Inc. As part of its crackdown on impropriety on Wall Street, the U.S. Justice Department has been pressing the case, against the Kolkata-born graduate of Harvard Business School, since October last year; he is one of the 23 individuals who faced criminal charges linked to Mr. Rajaratnam’s Galleon Hedge fund.
While prosecutors in the case, led by Attorney Preet Bharara, argued for a minimum of 10 years in prison for Mr. Gupta, defence lawyer Gary Naftalis asked Judge Rakoff for probation and leniency, noting that Mr. Gupta was willing to shoulder a community service sentence in rural districts of Rwanda — entailing work with local healthcare programme to combat HIV, malaria, poverty and food insecurity. After the sentencing, Mr. Bharara said, “Rajat Gupta now must face the grave consequences of his crime — a term of imprisonment. His conduct has forever tarnished a once-sterling reputation that took years to cultivate. We hope that others who might consider breaking the securities laws will take heed from this sad occasion and choose not to follow in Gupta’s footsteps.”
