U.S. court studies wiretaps in ex-Goldman director's insider case

Tue May 21, 2013 2:23pm EDT
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By Nate Raymond

NEW YORK (Reuters) - Lawyers for former Goldman Sachs Group Inc (GS.N: Quote) board member Rajat Gupta sought to reverse his insider-trading conviction on Tuesday, arguing that wiretap evidence used by the prosecution should not have been introduced at trial.

Defense lawyer Seth Waxman told the 2nd U.S. Circuit Court of Appeals in New York that wiretaps played for the jury were inadmissible because they amounted to hearsay evidence.

Gupta himself was not heard on the wiretaps, which are instead conversations between convicted Galleon Group manager Raj Rajaratnam and other employees at the hedge fund.

"Those wiretaps should never have been admitted," Waxman told a three-judge panel of the appeals court.

The arguments marked a challenge to one of the highest-profile convictions in the U.S. government's crackdown on insider trading on Wall Street.

Gupta, 64, is a former head of the consultancy McKinsey & Co and a one-time board member at Goldman and Procter & Gamble Co (PG.N: Quote). He was sentenced to two years in prison in October for spilling confidential information about Goldman to Rajaratnam, his one-time friend who is now serving 11 years in prison for insider trading.

The 2nd Circuit in December said Gupta could remain free on bail while he appeals his conviction.

WIRETAPS AT ISSUE   Continued...

Former Goldman Sachs Group Inc board member Rajat Gupta departs Manhattan Federal Court after being sentenced in New York, October 24, 2012. REUTERS/Lucas Jackson