New York, NY – This week, former managing partner at McKinsey & Co. Rajat Gupta, and Galleon Group founder Raj Rajaratnam, are expected to receive important court decisions on their respective insider trading cases. The following is a brief description of these decisions.
Gupta Sentencing on Wednesday
This Wednesday, Rajat Gupta, who was convicted in June of leaking material nonpublic information about Goldman Sachs to Galleon Group founder Raj Rajaratnam, will receive his sentence from Judge Jed Rakoff. Gupta is the highest-profile executive caught, tried and convicted in the US government’s campaign to crack down on insider trading.
Federal prosecutors asked the court to sentence Gupta to prison for 10 years saying that this was “necessary to reflect the seriousness of Gupta’s crimes and to deter other corporate insiders in similar positions of trust from stealing corporate secrets and engaging in a crime that has been far too common.”
Gupta’s lawyer is pushing for probation and has asked the court to consider his client’s fall from grace as punishment enough. In support, a number of prominent businessmen and humanitarians have come to Gupta’s defense, including Microsoft’s co-founder Bill Gates and former United Nations Secretary-General Kofi Annan. Their pleas for leniency were among 200 supportive letters sent to the court.
Most court watchers suggest that Judge Rakoff, who has been openly critical of the federal sentencing guidelines in the past, is unlikely to give Gupta the maximum 10 year sentence requested by Federal prosecutors.
Raj Challenges Conviction
On Thursday, a federal appeals court is set to hear oral arguments in billionaire Raj Rajaratnam’s attempt to overturn his insider-trading conviction.
In 2011 Rajaratnam was found guilty on 14 counts related to insider trading – nine on securities fraud and five for conspiracy. He is currently serving an 11-year prison sentence for this conviction – one of the longest sentences ever handed out for insider trading.
Rajaratnam is seeking to overturn his conviction on grounds that the U.S. government improperly won permission to record his phone conversations. A panel of three judges on the 2nd U.S. Circuit Court of Appeals in New York will allow prosecutors and Rajaratnam’s lawyers 15 minutes each to make their arguments.
Originally Rajaratnam lost his bid to suppress the wiretaps as evidence in his trial in November 2010. His lawyers argued then, as they do in their appeals briefs, that investigators did not meet the requirements under Title III, a federal statute that governs the use of wiretaps.
Legal experts suggest it is extremely unlikely that Rajaratnam will win his move to overturn the original insider trading investigation on these grounds.