• 17 Jun 2014 at 3:23 PM

Civil Penalty Watch ’14: Rajat Gupta

Ex-Goldman Sachs board member Rajat Gupta reported to prison earlier today for, among other things, being unable to wait more than 23 seconds to spill material non-public information to now-known insider trader Raj Rajaratnam. Also, he needs to come up with about $24.9 million, if anyone’s feeling generous.

Former Goldman Sachs Group Inc director Rajat Gupta on Tuesday began serving his two-year prison term for insider trading, and lost his challenge to a $13.9 million civil penalty and permanent ban from acting as a public company officer. Gupta, 65, reported to FMC Devens, a medical facility and satellite camp in Ayer, Massachusetts about 40 miles (64 km) northwest of Boston, a spokesman for the Federal Bureau of Prisons said. The former global managing director of the McKinsey & Co consulting firm began his term as the 2nd U.S. Circuit Court of Appeals separately rejected his claim that the fine and officer ban imposed in a separate U.S. Securities and Exchange Commision civil case was excessive. A three-judge panel of that court concluded that U.S. District Judge Jed Rakoff, who oversaw the criminal and civil cases, acted within his discretion in imposing that punishment…In his criminal case, Gupta was also ordered to make $6 million in restitution to Goldman and pay a $5 million fine.

Ex-Goldman director goes to prison, still owes $13.9 million fine [Reuters]

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  1. Posted by Research Team | June 17, 2014 at 4:05 PM

    I'm pretty sure he'll be able to come up with it.

  2. Posted by AnnadaAnath | June 17, 2014 at 5:25 PM

    Let's host backyard BBQs at the mansions of his backers vouching for his stellar character. I'd be happy to bring a container of potato salad and two bucks from my meager savings, if invited, to contribute towards paying off his legal bills. Other volunteers willing to chip in?

  3. Posted by David C. Jones | June 18, 2014 at 6:15 PM

    The essence of “economics-in-community” is very much to provide meaningful and satisfying work, as it is a means to creating: adequate and quality goods and services; decent recreation; and, quiet cultural or spiritual reflection. Yet, the markets for goods and services is rarely emphasized and the market for labor is highlighted only as for a commodity, to the extent that an increase in employment (reduction in unemployment) of ordinary workers might threaten the monetary values of the wealth-tokens of money-traders! Even though the real (economic) values of these tokens are, in effect, zero!

    The (so-called) “market,” almost always, refers to financial or commodity markets. It concerns, almost entirely, the secondary financial or commodity markets, because only a minuscule proportion of this market activity is concerned with the creation of new capital or commodities.

    Ironically, attention is focused almost entirely upon the only category of market transactions which creates no new assets, no material production and no public or private services. Instead, it trades only in the symbols of real economic production, (i.e. MONEY) by the exchange of monetary instruments of ownership (i.e. PAPER). It is a search for enrichment of those who wager on the future values of these symbols.

    Because this market creates no real resources, participants can only become rich at other people’s expense, including (but not exclusively) other participants in the market. This is known as the “zero-sum” model.

    Participants (in its conversion to a “negative-sum” model) include the commission-seeking brokers, litigious lawyers, tax-gimmicky and creative accountants, credit-rating agencies, merger manipulators, green-mailers, bond dealers, advisers and other unproductive rent-seekers of all kinds. All are, effectively, gamblers. They are not – nor ever have been, producers of anything, except for massive mistakes and misjudgments, at the expense of everyone else.

    [Adapted from: “The Common Good” (Daly & Cobb)]