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Gupta asks court to rethink order to pay $13.9-mn penalty

April 08, 2014 13:59 IST

Gupta asks court to rethink order to pay $13.9-mn penalty

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Yoshita Singh in New York

India-born former Goldman Sachs director Rajat Gupta has asked a US court to reconsider its order asking him to pay $13.9 million in civil penalties in the insider trading case, arguing it was unnecessary given the heavy criminal punishment imposed on him.

In a 23-page brief filed with the Court of Appeals on Monday, Gupta's lawyers said the insider trading violations due to which he was convicted were a ‘dramatic deviation’ from a lifetime that has been otherwise marked by ‘outstanding professional accomplishment’ and he should not be made to pay a ‘heavy criminal penalty’.

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Image: Rajat Gupta.
Photographs: Reuters

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Gupta's lawyers said he did not accrue any ‘direct financial benefit’ from the insider trading offences and yet he has been ordered to pay a ‘heavy price’ of two years in prison, a $5 million fine and a separate $6 million in restitution to Goldman Sachs.

In addition, the district court ordered 65-year-old Gupta to pay an additional $13.9 million dollars in civil penalties and imposed severe lifetime injunctions against him in Securities and Exchange Commission's parallel case.

"The Court should reverse the orders of injunctive relief and vacate and remand the civil penalty for the district court to reconsider in light of Gupta's criminal sentence," the lawyers said in the brief.

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Image: Rajat Gupta (2nd R) leaves Manhattan Federal Court with his lawyer, Gary Naftalis (R).


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Gupta asks court to rethink order to pay $13.9-mn penalty

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Gupta's lawyers stressed that the district court ‘abused’ its discretion in imposing the $13.9-million civil penalty after having already sentenced him to serve a two-year prison term, a $5 million fine and more than $6 million in restitution to Goldman Sachs.

Gupta argued that this maximum civil penalty was unnecessary given the heavy criminal punishment imposed on him.

"No reasonable observer could doubt that this heavy criminal penalty for an isolated deviation will have a profound punitive and deterrent effect," Gupta's lawyers said.

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Image: Rajat Gupta.
Photographs: Reuters

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"Rajat Gupta was convicted of an offence that, the district court emphasised, was a marked departure from the way he has lived his entire life," the lawyers said in their brief.

They said that Gupta has made ‘extraordinary and significant’ philanthropic contributions and ‘notwithstanding Gupta's convictions, all of the evidence suggested that Gupta was unlikely to repeat his transgressions.’

Last month the appeals court had upheld Gupta's conviction by a district judge on insider trading charges and denied his bid for a new trial, ruling that there is no merit in the former Goldman Sachs director's arguments.

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Image: Rajat Gupta.
Photographs: Reuters

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