Ex-Goldman Sachs executive sentenced
Rajat Gupta given two years in prison and fined $5m for insider trading after defence lawyers cited his many good deeds.
Last Modified: 25 Oct 2012 05:35
The judge said Gupta, centre, should be allowed to spend the Christmas period with his family [Reuters]

Rajat Gupta, a former Goldman Sachs and Procter & Gamble board member, has been sentenced to two years in prison and ordered to pay a $5m fine for insider trading.

The 63-year-old, from Westport, Connecticut, will not begin his sentence immediately, however, after the judge decided  on Wednesday that he should be allowed to spend the Christmas period with his family.

The Harvard-educated businessman will have to report to prison by January 8, 2013.

"The last 18 months have been the most challenging period of my life since I lost my parents as a teenager," said Gupta.

"I regret terribly the impact of this matter on my family, my friends and the institutions that are dear to me. I've lost my reputation I built for a lifetime. The verdict was devastating."

Prosecutors described how Gupta raced to telephone billionaire hedge-fund manager Raj Rajaratnam with stock tips, sometimes only seconds after getting them from board conference calls, allowing Rajaratnam to make more than $11m in illegal profits for himself and his investors.

Rajaratnam case

Rajaratnam is serving an 11-year prison sentence after his conviction at trial last year.

Prosecutors say Rajaratnam earned up to $75m illegally through his trades, while Gupta made no profit, his legal team said.

At trial, Gupta was convicted of three counts of securities fraud and one count of conspiracy, insider trading charges that prosecutors said should result in a prison sentence of up to ten years in prison.


Cath Turner reports from New York on Gupta's sentencing

"This is a crime easy to commit, hard to catch,"' the judge said at sentencing. "Therefore the need for general deterrence is strong."

Prosecutors accused Gupta, a former chief of the global consulting firm McKinsey & Co and ex-director of the  consumer products company Procter & Gamble, of "above-the-law arrogance" in feeding Rajaratnam inside 
information between March 2007 and January 2009.

 Lloyd Blankfein, Goldman Sachs chairma, testified at trial that Gupta appeared to have violated the investment bank's confidentiality policies.

"Gupta's crimes are shocking," prosecutors wrote. "Gupta's crimes are extraordinarily serious and damaging to the capital markets.

"It understandably fuels cynicism among the investing public that Wall Street is rigged and that Wall Street professionals unfairly exploit privileged access to information.

"This is particularly troubling at a time when there is widespread concern about corruption, greed and recklessness at the highest levels of the financial services industry."

Philanthropy cited

Defence lawyers cited Gupta's many good deeds worldwide, saying they were unusual enough to warrant a sentence of
probation with instructions to perform community service.

Gary Naftalis told the judge that Gupta had "one of the best reputations on the planet. His loss of reputation is severely strong punishment".

The defence noted that the Rwandan government supported a programme in which Gupta would work with rural districts to fight HIV, malaria and extreme poverty and to help provide food security.

The lawyers said the Rwandan government would join with a US-based organisation already working in the country to ensure effective supervision of Gupta's service.

They also said prison would spoil the efforts by Gupta, who was born in Kolkata, India, to develop new initiatives, including the Urban Institute of India, meant to bring the private sector, academia and the Indian government together to address accelerating migration to India's cities.

Goldman tip

Bill Gates, Microsoft co-founder, and Kofi Annan, former UN secretary-general, both wrote letters of support on Gupta's behalf, two of more than 400 such letters collected by Gupta's legal team.

"The conduct for which he was convicted represents an isolated aberration and a stark departure from this personal history," the lawyers wrote.

At Gupta's trial, which began in May, prosecutors highlighted a phone call made on September 23, 2008, reportedly made from Gupta to Rajaratnam only minutes after Gupta had learned, during a confidential conference call, about Warren Buffett's planned investment of $5bn in Goldman Sachs.

Moments after the phone call ended at 3:55pm, Rajaratnam purchased $40m in Goldman shares - an 11th hour trade that ended up making him nearly $1m at the height of the financial crisis that had engulfed the country, and much of the Western world.

In another recorded phone call in 2008, Rajaratnam told one of his traders that he had got a tip "from someone who's on the board of Goldman Sachs" that the US bank was facing an unexpected quarterly loss.

Gupta, prosecutors said, was motivated to help Rajaratnam because he had a financial stake in some of the hedge fund manager's business ventures.


Al Jazeera And Agencies
Topics in this article
Featured on Al Jazeera
An innovative rehabilitation programme offers Danish fighters in Syria an escape route and help without prosecution.
Street tension between radical Muslims and Holland's hard right rises, as Islamic State anxiety grows.
Take an immersive look at the challenges facing the war-torn country as US troops begin their withdrawal.
Ministers and MPs caught on camera sleeping through important speeches have sparked criticism that they are not working.
Anti-government secrecy organisation struggling for relevance without Julian Assange at the helm.
After decades of overfishing, Japan is taking aim at increasing the number of bluefin tuna in the ocean.
Chinese scientists are designing a particle-smashing collider so massive it could encircle a city.
Critics say the government is going full-steam ahead on economic recovery at the expense of human rights.
Spirits are high in Scotland's 'Whisky Capital of the World' with one distillery thirsty for independence.
join our mailing list