Former Goldman Sachs Indian American director Rajat Gupta has sued the Securities and Exchange Commission (SEC), accusing the US regulator of "unfairly and unconstitutionally" connecting him to the biggest insider trading case in the US.
Earlier this month, the SEC filed charges against Gupta, former head of consultancy McKinsey & Co accusing him of giving inside information about Goldman Sachs to his friend and business partner Raj Rajaratnam.
Sri Lankan born Rajaratnam, former head of the Galleon hedge funds, is on trial in a Manhattan federal court on 14 counts of insider trading. He has denied any wrongdoing.
The SEC alleges that when he was a Goldman Sachs director, Gupta tipped Rajaratnam on Goldman earnings and the $5 billion Berkshire Hathaway investment, as well as other material, non-public information about the bank, which Rajaratnam then allegedly traded on.
In a suit filed Friday in the same federal court where Rajaratnam is being tried, Gupta, 62, said the regulator should have filed a lawsuit instead.
"Gupta denies all allegations of wrongdoing and stands ready to mount a defence against each and every one of the commission's charges," his lawyer, Gary Naftalis, said in the complaint.
Gupta seeks a jury trial and to have the SEC barred from asking for civil penalties. He is also seeking a court order keeping the agency from pursuing its administrative claims.
Under SEC rules, Gupta isn't allowed a jury trial in an administrative action, or the right to use federal court rules on discovery, which require the exchange of evidence with the government, Naftalis said.
The suit argues that the SEC proceeding will deny Gupta a number of legal protections he would have in federal court, including a trial by jury.
Gupta's lawyer has said Gupta did nothing wrong, and the new suit says "there is no plausible reason why Gupta would have deviated from a lifetime of probity and a career dedicated to safeguarding corporate confidences in favour of engaging in the significant and aberrational wrongdoing alleged."
In addition to the complaints about the SEC's methods, the new suit reviews Gupta's background as the child of a teacher and a "prominent freedom fighter" in India, and notes that "he has devoted approximately half of his time to a number of significant public service commitments."