Rajat Gupta gets two years in prison for insider trading: Top 10 developments

Former Goldman Sachs director Rajat Gupta was on Wednesday sentenced to two years in prison for leaking the investment bank's boardroom secrets to Raj Rajaratnam, the hedge fund manager at the centre of the US government's crackdown on insider trading. The sentence is much lighter than what US prosecutors had demanded. The judge called his insider trading crimes "disgusting" and "a terrible breach of trust." Mr Gupta was also ordered to pay a $5 million fine. He was convicted in a Manhattan federal court last June. US District Judge Jed Rakoff told a somber courtroom audience, including Gupta's wife and four adult daughters, that the illegal sharing of corporate secrets at the height of the 2008 financial crisis "was the functional equivalent of stabbing Goldman in the back". But the judge also said: "I have never encountered a defendant whose past history suggests such an extraordinary devotion ... to people in need." The judge refused Mr. Gupta’s request to remain free while he appeals his case. Mr. Gupta, who lives in Westport, Conn., must surrender to federal prison authorities by January 8. In court, Mr Gupta said he regretted his actions. "I have lost my reputation that I have built over a lifetime," he said. In a statement, the US attorney in Manhattan, Preet Bharara, said of Gupta, “His conduct has forever tarnished a once-sterling reputation that took years to cultivate ... We hope that others who might consider breaking the securities laws will take heed from this sad occasion and choose not to follow in Mr Gupta’s footsteps.” Mr Gupta, 63, who ran the consulting firm McKinsey & Co and served as a top adviser to the foundations of Mr Bill Gates and Bill Clinton, is the most prominent figure to face prison in the government’s sweeping crackdown on insider trading. The Microsoft co-founder, and former United Nations Secretary-General Kofi Annan were among 400 friends and luminaries who had written letters to the judge urging leniency. Mr Gupta's fall from grace began in April 2010, as part of an investigation into Mr Rajaratnam, the Sri Lankan hedge fund manager accused of insider trading. The US government accused Mr Gupta of tipping off Mr Rajaratnam of billionaire investor Warren Buffett's decision to invest $5 billion in Goldman Sachs. Mr Gupta allegedly learned this on September 23 in 2008 at a board meeting. His tip allegedly allowed Mr Rajaratnam to buy the stock before the news was made public the next day. Mr Rajaratnam made a profit of $800,000 in just 24 hours. US prosecutors had sought up to 10 years in prison for Mr Gupta for his "shocking insider-trading crimes”. The US government had said the former Goldman director should get a significant prison term, and that he time and again flouted the law and abused his position of trust as a corporate board member. Mr Gupta was convicted in the case in June this year. Born in Kolkata on 2 December, 1948, Mr Gupta joined McKinsey, the elite management consulting firm as an earnest, understated young man, fresh out of Harvard Business School, and IIT, Delhi, before that. He rose rapidly through a competitive system, going on to rule boardrooms, chair non-profit boards, and move with CEOs and heads of state from Bill Gates to Bill Clinton. Upon retiring from McKinsey, in 2007, after nine years as its managing director, Mr Gupta was a sought-after figure on corporate and non-profit boards, and joined those of Goldman, Procter & Gamble, American Airlines, and Harvard Business School. (With inputs from agencies)

Rajat Gupta gets two years in prison for insider trading: Top 10 developments

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