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Alternative Market Briefing

Court upheld Rajat Gupta’s insider trading conviction and prison sentence

Friday, July 03, 2015

Komfie Manalo, Opalesque Asia:

U.S. District Judge Jed Rakoff on Thursday upheld the two-year prison term against former Goldman Sachs Group director Rajat Gupta and rejected his appeal to dismiss his insider-trading conviction by a New York federal jury in 2012.

The 66-year-old Gupta asked the court to reverse his conviction after an appeals court ruled in December 2014 that prosecutors must establish that a person who provided an inside tip must receive personal benefits for leaking a secret information. The appeals court ruling has resulted in several convictions obtained by Manhattan U.S. Attorney Preet Bharara to be overturned later, reported Bloomberg.

In his appeal, Gupta, the highest-ranking executive convicted in the on-going crackdown on insider trading at hedge funds, told Rakoff that prosecutors failed to prove that he gained personal benefits from passing inside information to his friend, billionaire hedge fund manager Raj Rajaratnam about the $5bn investment of Berkshire Hathaway in Goldman Sachs as well as tips on the bank’s finances for two quarters in 2008.

The convicted former Goldman Sachs director said the federal jurors also failed to prove that the tips he provided Rajaratnam gave him "consequential benefits," therefore his action is no longer a crime based on the appeals court ruling.

But Rakoff said......................

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