New York: Rajat Gupta, an India-born former Goldman Sachs director, who was freed rlast month after a 2-year jail term on insider trading charges, has approached a US court to overturn his conviction, arguing that there is no evidence to show that he “received even a penny” for passing confidential boardroom information to his friend.
In an exhaustive brief filed in the Second Circuit Court of Appeals yesterday, 66-year-old Gupta’s team of lawyers argued that the judgement of the Manhattan district court finding Mr Gupta guilty of insider trading “should be reversed” and his “conviction should be vacated.”
Gupta’s appeal comes on the back of a landmark ruling by the Manhattan appeals court that for an insider trading conviction prosecutors must show that a defendant received a personal benefit for passing illegal tips. Gupta’s lawyers have cited the ruling that led to the reversal of insider convictions of hedge-fund managers Todd Newman and Anthony Chiasson in December 2014.
“As this Court has noted, not every disclosure of corporate information violates the insider trading laws. Given the stakes in a criminal case, and the apparently boundless use being made of the securities laws by prosecutors, this Court in Newman imposed a clear rule: The tip must be shown to have been part of a quid pro quo agreement,” the lawyers wrote in the brief.
“Rajat Gupta was severely prejudiced by the erroneous instruction. The government lacked evidence showing Mr Gupta received even a penny from his alleged wrongdoing. There was no quid pro quo,” they said.
Jailed in June 2014 in Devens, Massachusetts, Gupta was freed after receiving credit for good behavior against his 30-month sentence, according to Patrick McFarland, a manager for the Federal Bureau of Prisons program in the New York area which is overseeing Gupta. McFarland declined to provide more details.
A former McKinsey & Co. managing partner, Gupta is the highest-profile executive convicted in a U.S. crackdown on insider trading at hedge funds. Since August 2009, federal prosecutors in New York won 80 convictions. Gupta was found guilty in 2012 of passing illegal tips to Rajaratnam, a co-founder of the Galleon Group LLC hedge fund. He told Rajaratnam about Berkshire Hathaway Inc.’s $5 billion investment in Goldman Sachs and the bank’s financial results for two quarters in 2008.