Ex-Goldman director Gupta awaits sentence in insider case

NEW YORK, Wed Oct 24, 2012 – The sentencing on Wednesday of fallen Wall Street titan Rajat Gupta for insider trading could come down to whether a judge agrees that his lifetime of charity counts against sending him to prison.

The former Goldman Sachs Group Inc. board member was convicted in June of leaking boardroom secrets to hedge fund manager Raj Rajaratnam, his friend and former business associate, at the height of the financial crisis.

Gupta, 63, is to be sentenced by Manhattan U.S. District Judge Jed Rakoff, who oversaw the four-week trial. The former Goldman director, who also once ran the McKinsey & Co consulting firm and sat on the boards of Procter & Gamble Co and American Airlines, is the most influential corporate figure to be convicted in the recent crackdown on insider trading.

Indian-born Gupta had moved in elite business and philanthropic circles for decades until he became ensnared in the Rajaratnam case.

Gupta’s lawyers have requested that he be spared prison, citing his work with groups such as the Bill & Melinda Gates Foundation on fighting disease in developing countries. Bill Gates, Microsoft Corp’s co-founder, and former United Nations Secretary-General Kofi Annan are among the luminaries who have urged Rakoff to be lenient.

As one alternative to prison, the defense proposed “a less orthodox” plan in which Gupta would live and work with Rwandan government officials to help fight HIV/AIDS and malaria in rural districts, court papers said.

Federal prosecutors, however, argue that Gupta should serve eight to 10 years in prison. Gupta repeatedly flouted the law and abused his position as a corporate board member, they said.

 

Gupta’s fate may hinge on witnesses, not wiretaps

NEW YORK,| Thu Jun 14, 2012 – Through phone logs, trading records and a parade of witnesses, U.S. prosecutors repeatedly worked to connect the dots between Rajat Gupta, the former head of top consulting firm McKinsey & Co., and his hedge fund manager friend Raj Rajaratnam.

It is now up to a Manhattan federal jury to decide if this evidence against Gupta, a former board member at Goldman Sachs Group Inc. and Procter & Gamble Co., is persuasive enough to convict him.

Historically, insider trading cases have been difficult for prosecutors to win because of their circumstantial nature. The investigation of Rajaratnam – built on eight months of court-approved wiretaps and culminating in his conviction at trial last year – was a major exception because the government had dozens of secretly recorded telephone calls of him discussing stock tips with friends and associates.

In the Gupta case, prosecutors only had a few wiretaps they could use to bolster their charges that Gupta supplied Rajaratnam with some of his juiciest tips. They had no telephone recording between the two men to back one of their most dramatic contentions: that Gupta, a minute after disconnecting from a Goldman board conference call on Sept. 23, 2008, told Rajaratnam about plans by Warren Buffett’s Berkshire Hathaway to inject $5 billion in the investment bank.

The jury heard evidence that Rajaratnam hurriedly ordered his traders at hedge fund Galleon Group to try to buy $40 million worth of Goldman stock in the few minutes that remained in the trading day after he received that 35-second call from Gupta.

“There was only one call to Rajaratnam’s direct line in the last 10 minutes of the trading day, only one call in the last hour,” Assistant U.S. Attorney Richard Tarlowe said in his closing argument Wednesday. “And it was from Rajat Gupta.”

Gupta’s defense lawyer, Gary Naftalis, responded: “If he was truly rushing, he wouldn’t have waited a minute, he would have called in two or three seconds.”

Two jurors drop out of Gupta insider-trading trial

NEW YORK, Tue May 29, 2012 – Two jurors have dropped out of the insider-trading trial of former Goldman Sachs Group Inc. board member Rajat Gupta, who is charged with giving corporate secrets to imprisoned hedge fund manager Raj Rajaratnam.

Both were excused from the 12-person jury in Manhattan federal court because of family emergencies. The place of Juror No. 12, a professor of strategic design and behavior, was taken on Thursday by one of four alternates, a retired librarian. Juror No. 4, an executive assistant at a hospital, was excused on Tuesday and replaced by another alternate, a marketing manager for a publishing firm.

Gupta, 63, a former global head of management consulting firm McKinsey & Co, is the most prominent corporate figure indicted in the U.S. government’s broad crackdown on insider trading in recent years. He is charged with tipping Rajaratnam between March 2007 and January 2009 while he was a director of Goldman Sachs and Procter & Gamble Co.

Gupta has pleaded not guilty and argues that the prosecution’s evidence is circumstantial.

Galleon Group hedge fund founder Rajaratnam, 53, was convicted a year ago on evidence largely based on court-approved wiretaps of his phones. He is appealing the use of wiretaps as he serves an 11-year prison term, the longest handed down for insider trading in the United States.

Gupta’s trial began last week and is expected to run about three weeks. To convict him of insider trading, the jury must be convinced beyond a reasonable doubt that he breached his fiduciary duties and that he did it intentionally and in anticipation of at least some modest benefit in return.

Ex-Goldman director Gupta loses wiretap ruling

NEW YORK, Tue Mar 27, 2012 – Former Goldman Sachs Group Inc. director Rajat Gupta lost his bid to suppress wiretap evidence from his upcoming criminal insider-trading trial on charges that he leaked boardroom secrets to hedge fund founder Raj Rajaratnam.

U.S. District Judge Jed Rakoff in Manhattan issued his ruling on Tuesday ahead of Gupta’s scheduled May 21 trial.

Gupta, a one-time global head of the McKinsey & Co. consultancy, is the most prominent corporate executive charged in the U.S. government’s investigation of illicit trading on Wall Street.

The wiretaps include the same ones admitted by U.S. District Judge Richard Holwell at Rajaratnam’s insider-trading trial. Rajaratnam, founder of the Galleon Group, was convicted last May and is serving an 11-year prison term.

Rakoff ruled that the government could use the recordings at Gupta’s trial, saying that “insider trading cannot often be detected, let along successfully prosecuted, without the aid of wiretaps.”

But Gupta also won a victory as Rakoff directed the U.S. Securities and Exchange Commission, which has a separate civil case against Gupta, to turn over some materials to prosecutors. The prosecution must then turn over evidence to the defense that may help Gupta show his innocence.

Rakoff said Gupta had demonstrated a “substantial need” for such evidence that overcomes any need for the SEC to keep the materials private.

Gary Naftalis, a lawyer for Gupta, declined to comment.