Former Goldman Sachs director Rajat Gupta was sentenced to two years in jail and fined $5 million for insider trading on Wednesday. He will begin his jail term in January.
Rajat Gupta convicted of insider trading
After the jail term, he will also be subject to one year of supervised release, after the jail term.. Gupta took the sentencing impassively, showing no emotions. His family sitting behind the gallery also didn’t react much, unlike when he wash held guilty in June.
Judge Jed S Rakoff said even good men do bad things and all of Gupta’s good acts of philanthropy didn’t absolve him of the crime which was “a functional equivalent of stabbing Goldman in the back.
He has to surrender for starting his jail term on January 8, 2013.
Gupta, who was born in Kolkata and raised in Delhi -- went to Modern School, ran McKinsey & Co from 1994 to 2003 as its youngest managing director ever.
He was held guilty in June of passing insider information about Goldman Sachs, where he was a director, to billionaire hedge fund owner Raj Rajaratnam.
He tipped Rajaratnam about a $5 billion investment into Goldman Sachs by Warren Buffet’s Berkshire Hathaway at the peak of The Great Recession in September 2009.
He was also found guilty of passing information about a quarterly loss to Rajaratnam, whose hedge fund Galleon traded early on that information to avoid losses.
But he was acquitted of charges of passing tips about consumer goods giant P&G, where he was a director, and Goldman Sachs profits for a quarter in 2007.
Prosecutors had sought a prison term for 97 months to 121 citing federal guidelines, which, however, are not binding.
Gupta’s lawyer Gary Naftalis had filed for leniency for his client last week saying, “Rajat Gupta has lived an exemplary life of uncommon accomplishment, compassion and generosity.”
And that his crimes were limited to a two-month period in 2008.
Naftalis suggested Gupta could be punished to work with needy children in New York or the poor in Rwanda, whose justice minister Tharcisse Karugarama was among 400 people who have written to the judge about Gupta philanthropy.
Rajaratnam was sentenced to 11 years in jail for securities fraud and insider trading in 2011. His appeal against his conviction is coming up for a hearing on Thursday.
Federal prosecutors came upon Gupta while investigating Rajaratnam, whose phone was being secretly recorded following an unprecedented request to a New York judge in 2008.
Who is Rajat Gupta
Following the wiretap, 22 people were charged in largest such investigation in recent US history, part of a crackdown launched four years ago on securities frauds.