A U.S. court upheld the 2012 conviction of Rajat Gupta (65), former Goldman Sachs Director and McKinsey Managing Partner, on insider trading charges, making it likely that he will now have to submit to the two-year jail term handed down to him.
On Tuesday the U.S. Court of Appeals for the Second Circuit upheld the 2012 guilty verdict in the case brought against him for supplying confidential information to jailed hedge fund boss Raj Rajaratnam.
In October of that year Mr. Gupta received a two-year jail term from U.S. judge Jed Rakoff, well below the government's request for an eight year sentence, 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, although he was allowed to remain free until his appeal.
At the time Mr. Gupta was found guilty 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 currently serving out an 11-year jail term. At his sentencing Mr. Gupta said he regretted his actions, “noting he lost a reputation he spent a lifetime building.”
Charges specifically stemmed from allegations by prosecutors in the case, led by Indian-American U.S. Attorney Preet Bharara, 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.
This week Circuit Judge Amalya Kearse wrote in a 48-page decision that there was “ample evidence” to support a finding that Mr. Gupta conspired to pass confidential tips about Goldman Sachs to Rajaratnam.
As part of its crackdown on impropriety on Wall Street the U.S. Justice Department pressed the case against the Kolkata-born graduate of Harvard Business School since October 2011 and he is one among at least 23 individuals who faced criminal charges in connection to Mr. Rajaratnam’s Galleon Hedgefund.
Much of the case against Mr. Gupta and Mr. Rajaratnam was built on wiretaps evidence, some of which also led to controversy. Particularly Mr. Gupta's lawyer Gary Naftalis had called for a new trial last May, arguing that Mr. Gupta’s case was “harmed when jurors were allowed to hear wiretaps of phone conversations Mr. Rajaratnam had with another Galleon portfolio manager in which Mr. Rajaratnam said he learnt from a Goldman board member that the bank would lose money for a quarter.”
They also said urged that Mr. Gupta had not been given the opportunity to present other reasons for calling Mr. Rajaratnam moments after hanging up from the Goldman board meeting conference call.
Prior to his sentencing a galaxy of celebrity friends, nearly 400 in number, including Microsoft Chairman Bill Gates and former United Nations Secretary-General Kofi Annan, had written in support of leniency for Mr. Gupta, 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.