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Wall Street's most high profile executive sent to jail

Last updated on: October 25, 2012 12:06 IST

Wall Street's most high profile executive sent to jail

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Yoshita Singh in New York

F
ormer Goldman Sachs director Rajat Gupta was on Wednesday sentenced to two years in prison and fined $5 million by a US judge, months after the Indian-American Wall Street titan was found guilty of leaking boardroom secrets to a hedge fund manager in the largest insider trading case in the country's history.

Gupta, 63, was handed down a two-year prison term by US District Court Judge Jed Rakoff, who also ordered him to pay a $5 million fine. Gupta, reading from a statement, said: "The last 18 months have been the most challenging period of my life since I lost my parents as a teenager."

"I regret terribly the impact of this matter on my family, my friends and the institutions that are dear to me. I've lost my reputation I built for a lifetime. The verdict was devastating," he said.

"His conduct has forever tarnished a once-sterling reputation that took years to cultivate," Manhattan's top federal attorney India-born Preet Bharara said.

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Image: Rajat Gupta coming out of the court after the sentencing.
Photographs: Paresh Gandhi/Rediff

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Gupta was found guilty by a federal court in Manhattan on four counts, out of six on June 15 after a three-week trial for passing boardroom secrets to the now imprisoned billionaire hedge fund founder Raj Rajaratnam at the height of the global financial crisis.

The Prosecution had sought a prison term of 8-10 years for Gupta who was convicted in a closely followed trial on three counts of securities fraud and one count of conspiracy.

The sentencing of India Inc's Wall Street poster boy by US District Judge Jed Rakoff comes exactly a year after Bharara filed insider trading charges against the former McKinsey head.

Gupta, the most high profile Wall Street executive to be convicted in the government's crackdown on insider trading, had sought leniency from the judge, citing his otherwise unblemished career and philanthropic works.

In a memorandum filed in federal court last week, Gupta's lawyer Gary Naftalis had sought probation for his Harvard educated client, saying Gupta is willing to live in Rwanda and work with the local government on health care and agricultural initiatives.

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Photographs: Paresh Gandhi/Rediff

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The second offer of community service made by Naftalis was that Gupta could work with Covenant House's New York site, which provides emergency shelter and other services for homeless, runaway and at risk youth.

Bharara had sought a prison term of 8-10 years for Gupta, arguing that his "shocking" crimes were not an "isolated occurrence or a momentary lapse in judgement and a "significant term of imprisonment is necessary to reflect the seriousness of Gupta's crimes and to deter other corporate insiders in similar positions of trust from stealing corporate secrets and engaging in a crime that has become far too common".

The Diwali of 2011 saw Gupta surrender himself before the FBI after charges of insider trading were filed against him.

The rise and fall of Gupta, who went from being one of the most successful India-born businessmen in the US to being called "deceptive and dishonest" after his conviction, has been the stuff of legends.

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Gupta's rise through the ranks of Corporate America was stellar with enviable posts like board seats at Goldman Sachs and Procter and Gamble, co-founder of the prestigious Indian School of Business, adviser to the executive leadership of the Bill and Melinda Gates Foundation as also the United Nations dotting his resume.

Gupta was also a director of the AMR Corporation, the parent company of American Airlines.

The Rockefeller Foundation appointed him a trustee; he was named special adviser on management reform to then UN Secretary-General Kofi Annan and additionally served on the UN Commission on the Private Sector and Development and was co-chairman of the United Nations Association of America.

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Gupta had also been getting support from family members, prominent business leaders and global philanthropic figures including Microsoft co-founder Bill Gates and former UN Secretary General Kofi Annan, who are among the 400 people who have written letters to Rakoff detailing Gupta's charitable work.

Gupta had pleaded not guilty to the charges and argued during his trial that he personally did not trade nor made any profits from the insider information he was accused of passing on to Rajaratnam, who is currently serving an 11 year prison term after being convicted last year.

After the guilty verdict was announced in June against Gupta, Bharara had said Gupta achieved remarkable success and stature, but he threw it all away.

"Rajat Gupta once stood at the apex of the international business community. He stands convicted of securities fraud. Having fallen from respected businessman to convicted inside trader, Gupta has now exchanged the lofty board room for the prospect of a lowly jail cell," Bharara had said.




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