Rajat Gupta loses appeal against conviction

A US federal court of appeal has rejected an appeal by former Goldman Sachs Group Inc director Rajat Gupta to overturn his conviction in an insider trading case connected with New York trader Raj Rajaratnam.

The Manhattan Federal Court of Appeal denied his bid for a new trial and upheld his conviction on insider trading charges, ruling that there is no merit in his appeal.

Gupta now faces two years in prison besides millions of dollars in penalty on various counts.

In a 3-0 decision, the Second US circuit court of appeals said there was ''ample evidence'' that Gupta was involved in a criminal conspiracy to share confidential information related to Goldman with Galleon Group hedge fund founder Raj Rajaratnam. It also affirmed the prosecutors' use of wiretap recordings during the trial.

"We have considered all of Gupta's arguments on this appeal and have found them to be without merit. The judgement of the district court is affirmed," the order said.

Gupta, also a former global managing director of consulting firm McKinsey & Co, had argued that wiretap evidence should not have been admitted against him (See: Rajat Gupta challenges his conviction).

Gupta, 65, is the highest-ranking US corporate official convicted of insider trading in the wider probe started four-and-a-half years ago.

He had been appealing his June 2012 conviction and two-year prison term for passing on confidential tips, including information on Goldman's financial results, as well as a crucial $5-billion investment during the financial crisis by Warren Buffett's Berkshire Hathaway Inc, from Goldman board meetings to Raj Rajaratnam in the second half of 2008.

Gupta, who was convicted in June 2012 of three counts of securities fraud and one count of conspiracy to commit securities fraud for allegedly sharing confidential information related to Goldman with Rajaratnam, a business associate, was ordered to pay a fine of $5 million and $6.22 million in restitution by the New York court (Rajat Gupta found guilty of insider trading), an order that is the subject of a separate appeal that has been held pending decision of the present appeal.

Gupta was also sentenced to two years' imprisonment, to be followed by a one-year term of supervised release. He had been free on bail pending decision on his appeal.

He is separately appealing a February 2013 court order that he reimburse $6.22 million to Goldman to help the bank cover its legal costs. Goldman was not implicated in wrongdoing (Convicted Rajat Gupta ordered to pay $6.2-m to Goldman).

US regulator Securities and Exchange Commission (SEC) has also asked the appeals court to affirm a district court's decision that Gupta pay a $13.9 million penalty and be banned for life from serving as director of a public corporation (SEC seeks $13.9m penalty, life ban on Rajat Gupta ).

The federal regulator has filed a brief in the US court of appeals for the second circuit, saying the district court acted well within its discretion by permanently barring Gupta from associating with brokers, dealers, and investment advisors, permanently enjoining him from future violations of the securities laws and permanently barring him from serving as an officer or director of a public company.

65-year-old Gupta has been granted time till 7 April to file his reply to the SEC brief.

Rajaratnam, who was earlier convicted of insider trading in a case that also relied heavily on wiretap evidence, is serving an 11-year prison term (Former Galleon chief, Raj Rajaratnam gets 11 years prison sentence).