Ex-Goldman director Gupta sentenced to two years' jail

Wed Oct 24, 2012 9:18pm EDT
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By Grant McCool and Basil Katz

NEW YORK (Reuters) - Disgraced Wall Street titan and philanthropist Rajat Gupta was sentenced to two years in prison on Wednesday, a much lighter sentence than U.S. prosecutors had demanded, by a judge who called his insider trading crimes "disgusting" and "a terrible breach of trust."

Gupta was also ordered to pay a $5 million fine. He was convicted in Manhattan federal court last June for leaking Goldman Sachs boardroom secrets to Raj Rajaratnam, the hedge fund manager at the center of a U.S. government crackdown on insider trading over the past four years.

Some legal experts said Wednesday's sentence came as a surprise, while others said the judge struck a fine balance.

U.S. District Judge Jed Rakoff told a somber courtroom audience, including Gupta's wife and four adult daughters, that the illegal sharing of corporate secrets at the height of the 2008 financial crisis "was the functional equivalent of stabbing Goldman in the back."

Gupta, 63, gave no visible reaction to the sentence, which was given at the end of a 30-minute statement in which the judge spelled out the businessman's "extraordinary" philanthropy over decades that stood in stark contrast to his crimes.

Bill Gates, Microsoft Corp's co-founder, and former United Nations Secretary-General Kofi Annan were among 400 friends and luminaries who had written letters to the judge urging leniency.

During the trial, the court heard how Gupta had tipped off his then friend and business associate Rajaratnam between September and October of 2008. Within minutes of a conference call of members of Goldman's board on September 23, 2008, Gupta told Rajaratnam that influential investor Warren Buffett was infusing $5 billion into the investment bank. Rajaratnam traded on the information as the market was closing.

Rakoff said during the two-and-a-half hour sentencing proceedings that the tip "was not only overwhelming, but it was disgusting in its implications ... a terrible breach of trust" at a time when Goldman Sachs was in turmoil.   Continued...

A courtroom sketch shows former Goldman Sachs Group Inc board member Rajat Gupta during his sentencing hearing at Manhattan Federal Court in New York, October 24, 2012. REUTERS/Jane Rosenberg