Ex-Goldman director Gupta's insider trading conviction upheld
By Jonathan Stempel
NEW YORK (Reuters) - A federal appeals court upheld the conviction of former Goldman Sachs Group Inc director Rajat Gupta, one of the biggest successes in federal prosecutors' long-running probe to stop insider trading on Wall Street.
The 2nd U.S. Circuit Court of Appeals rejected Gupta's claim that wiretap evidence should not have been admitted to show that he leaked news about Goldman's finances, including a crucial investment by Warren Buffett's Berkshire Hathaway Inc, by phone to Galleon Group hedge fund founder Raj Rajaratnam.
Circuit Judge Amalya Kearse said the timing of Gupta's calls, coming just one minute after he learned "extraordinary" news about Goldman's finances, followed by Rajaratnam's fast and large trades in Goldman shares, were "powerful evidence that Rajaratnam was given the confidential information by Gupta."
Tuesday's decision upholding Gupta's conviction and two-year prison term for securities fraud and conspiracy was a fresh endorsement of the aggressive tactics that prosecutors have used to thwart insider trading, in a probe unveiled in October 2009.
Gupta, 65, is a former global managing director of the consulting firm McKinsey & Co, and the top corporate official convicted in the probe.
The government has won 79 convictions and guilty pleas in its probe, much of which has focused on hedge funds.
Those convicted include Rajaratnam, as well as two portfolio managers for billionaire Steven Cohen's SAC Capital Advisors LP, Mathew Martoma and Michael Steinberg. SAC pleaded guilty to fraud in November. Cohen has not been criminally charged.
"We're very disappointed in today's decision, believe Mr. Gupta is entitled to a new trial, and are closely reviewing the opinion with an eye toward further review," Gupta's lawyer Seth Waxman, a WilmerHale partner and former U.S. solicitor general under President Bill Clinton, said in an email. Continued...