On Friday, a federal jury convicted ex Goldman Sachs Group, Inc. (NYSE:GS) director Rajat Kumar Gupta of insider trading; the case included shared information about Apple Inc.(NASDAQ:AAPL) and other technology companies.
The Wall Street Journal reported that Gupta had been convicted on the following: three securities fraud counts and one conspiracy; he was acquitted of two securities fraud counts.
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With the conviction, it has been perceived as a U.S. government victory as they attempt to suppress hedge funds’ insider trading.
Manhattan U.S. Attorney Preet Bharara said in a statement via Bloomberg, “Having fallen from respected insider to convicted inside trader, Mr. Gupta has now exchanged the lofty board room for the prospect of a lowly jail cell. Violating clear and sacrosanct duties of confidentiality, Mr. Gupta illegally provided a virtual open line into the board room for his benefactor and business partner, Raj Rajaratnam.”
So what did Gupta do?
Gupta participated in insider trading at the times he spoke about non-public Goldman Sachs boardroom information and Procter & Gamble (NYSE:PG) to the hedge fund manager, Raj Rajaratnam, founder of the hedge fund Galleon Group. From Gupta’s information, the firm earned millions of dollars.
He received an 11-year prison term for the insider trading charges but recently his attorneys entered information that pointed fingers at a Goldman Sachs executive, David Loeb, also giving information to Rajaratnam.
In a 9to5Mac story by Elyse Betters, Loeb is Goldman’s head of Asia equity sales. He allegedly had been caught via a U.S. wiretap giving confidential information to Rajaratnam on technology companies such as Apple Inc. (NASDAQ:AAPL), Intel Corporation (NASDAQ:INTC), and Hewlett-Packard Company (NYSE:HPQ).
Forget the Wiretap
But it may not be pertinent to Gupta’s case. According to SFGate, when the jury weighed Gupta’s, listening to the wiretap evidence during his trial didn’t happen. It had been ruled by U.S. District Judge Jed Rakoff as inadmissible hearsay.
Gupta’s attorney said not so fast and last week told the judge on the case that evidence about Loeb was vital for the defense and confirmed “that another person committed an act of which the defendant stands accused.”
Regardless, the defense has rested its case and the jury made their decision. Gupta’s attorney, Gary Naftalis said upon hearing the verdict, “We continue to feel that Mr. Gupta is innocent of all charges. We will be making a motion to set aside the verdict and appeal if necessary.”
He added that Gupta “didn’t trade” and that “He didn’t tip Mr. Rajaratnam. He didn’t receive a dishonest dime.”
Gupta will remain free on bail while he waits for his Oct. 18 sentencing hearing.