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NEW YORK, United States of America – Rajat Gupta, a former Goldman Sachs board member and pillar of the US business community, was found guilty Friday, June 15, in New York on insider trading charges in big victory for prosecutors probing Wall Street corruption.
The guilty verdict on four of six counts came after less than two days of deliberations at the end of a three week trial in Manhattan federal court.
The 63-year-old faced up to 25 years in prison if found guilty on all charges. The Indian-born businessman’s attorney, Gary Naftalis, said afterwards that he plans to challenge the verdict.
Prosecutors say Gupta, who also headed the renowned consultancy McKinsey & Co, fed private market-moving information to his former friend and hedge fund manager Raj Rajaratnam, sentenced last year to 11 years in prison for insider trading.
“Rajat Gupta once stood at the apex of the international business community. Today, he stands convicted of securities fraud. He achieved remarkable success and stature, but he threw it all away,” chief Manhattan prosecutor Preet Bharara said in a statement.
“Having fallen from respected insider to convicted inside trader, Mr Gupta has now exchanged the lofty board room for the prospect of a lowly jail cell,” he said.
“We said that insider trading is rampant, and today’s conviction puts that claim into stark relief.”
The defense tried to argue that Gupta was innocent and that the government had failed to back up its case with hard evidence.
However, the circumstantial evidence, amassed in wiretapped phone conversations, telephone records and trading data, clearly left the jury with little trouble in reaching a conclusion.
One of the key episodes in the prosecution case was Rajaratnam’s 2008 purchase of Goldman Sachs shares only seconds after Gupta called him in the wake of a Goldman board meeting.
It was during that board meeting, at the height of the 2008 banking crisis, that Goldman members secretly discussed the decision by investor Warren Buffett to pump $5 billion into the bank — a huge boost in a time of uncertainty.
There was no wiretapped conversation proving that Gupta tipped Rajaratnam, founder of the Galleon hedge fund, on the Buffett deal. But the phone and trading records presented a damning picture.
“The government’s case, albeit circumstantial, was a carefully drawn chronology that left little or no room for the belief that it was anything other than Gupta tipping off Rajararatnam,” said Michael Sabino, a professor at the Peter J. Tobin College of Business at Saint John’s University.
“The fact the jury turned around on it so incredibly fast demonstrates they had no trouble connecting the dots on the government’s charges.”
The FBI, which is part of the huge investigation into Galleon’s activities, welcomed the conviction.
“Gupta used his exclusive access to the board room to violate his fiduciary responsibility, repeatedly sharing confidential, inside information with his friend Raj Rajaratnam,” FBI Assistant Director Janice K. Fedarcyk said.
“Today’s verdict is the latest milestone in an FBI initiative undertaken in 2007 to zero in on illegal conduct in the hedge fund industry.” – Agence France-Presse
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