Prosecution deems case as the insider trading crime of the century.
By Deepak Chitnis
WASHINGTON, DC: Even as he starts his two-year jail term today, Rajat Gupta is still in the process of appealing the Securities and Exchange Commission (SEC) to lower the $14 million in civil penalties he has been ordered to pay for his criminal malfeasance.
Although Gupta (65) was not present in court on Monday in New York City to argue his case, defense lawyer Seth Waxman stood in for his client as he implored a three-judge panel at the 2nd US Court of Appeals, reports the Press Trust of India.
The SEC lodged a $13.9 million fine against Gupta after he was found guilty on charges of insider trading – charges that landed him his current jail term. While Gupta’s appeals in the criminal case ultimately proved futile, he hopes to at least mitigate the financial penalties levied against him by convincing the SEC that he has paid more than enough already.
Waxman told the judges that Gupta has already paid $5 million to the government as restitution in the criminal case, and has paid $6.2 million to Goldman Sachs, the hedge fund giant he worked for when his crimes took place. That total of $11.2 million, in addition to the $13.9 million demanded by the SEC, would put Gupta’s total financial penalties at $25.2 million – not to mention other legal fees incurred in the two years since Gupta was initially arrested.
Gupta’s legal team has argued that their client never did anything for direct financial benefit, and that his behavior in this case was an isolated incident that was totally out of step with the rest of his career. But the court wants someone to pay for Gupta having breached the trust of his company and investors, calling the insider trading case involving him and Raj Rajaratnam the crime of the century.
In the eyes of the SEC, US courts and government, if Gupta does not pay, then who will?
There is no word on if and when the SEC will come down with a decision to reduce Gupta’s fines. Gupta, meanwhile, is reporting to his medium-security penitentiary today, located in Massachusetts – ironically, quite close to where fellow insider trader Rajaratnam is serving his 11-year jail sentence for being involved, more explicitly, in the exact same scheme as Gupta.