Back in March, upon hearing that the U.S. Court of Appeals in New York had raised the bar for what constitutes insider trading, ex-McKinsey partner/ex-Goldman board member Rajat Gupta had a thought: "Maybe what I did no longer falls under the definition of this particular kind of securities fraud." And then another: "Maybe I can use this to my advantage, and get sprung from the big house."1 Gupta, you may recall, was accused (and ultimately found guilty of), among other things, waiting a mere 23 seconds before calling his friend and hedge fund manager Raj Rajaratnam with information he'd acquired during a Goldman board meeting.
So he got his legal team on the horn to make the case he should not just be a free man and maybe also, down the road, an esteemed director of public companies across the country (which he is currently prohibited from doing for the rest of his life). The government, strangely, has another take:
Prosecutors in Manhattan Thursday argued that Gupta, 66, received financial benefits for tipping Rajaratnam, the co-founder of Galleon Group LLC, and that he failed to argue the issue in his appeal and can’t raise it now. “The evidence established -- beyond a reasonable doubt -- that Gupta had a powerful, ongoing financial incentive to tip Rajaratnam with material nonpublic information that Rajaratnam could use to commit insider trading at Galleon,” prosecutors said in a filing opposing Gupta’s bid to reverse the conviction.