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| Edited By: Yoshita Singh |Source: PTI |Updated: Mar 30, 2018, 04:15 AM IST
Rajat Gupta, an iconic figure in US corporate sector who was arrested on charges of passing insider information to his friend Raj Rajaratnam, was released today on bail on a USD 10-million bond after he pleaded not guilty to offences that could keep him in jail for life.
The 62-year-old Indian-American, who has sat on the board of some of the top US companies like Goldman Sachs and Procter and Gamble, was indicted in the massive insider trading scandal that rocked Wall Street. He entered not guilty plea at his arraignment at a US District court here.
He is charged with one count of conspiracy to commit securities fraud and five counts of securities fraud. He faces a maximum penalty of five years in prison on the conspiracy charge and 20 years in prison on each of the securities fraud charges. If found guilty, Gupta faces a cumulative jail term of 105 years.
Gupta surrendered before the FBI yesterday. He was accused of sharing confidential information about investments at Goldman Sachs with billionaire hedge fund manager Rajaratnam, the Sri Lanka born founder of Galleon Group, who is already in jail for 11 years for insider trading scam, America's biggest.
US prosecutor Preet Bharara said Gupta broke the trust of some of US's top public companies and "became the illegal eyes and ears in the boardroom for his friend and business associate, Raj Rajaratnam, who reaped enormous profits from Mr. Gupta's breach of duty."
"As alleged, he broke that trust and instead became the illegal eyes and ears in the boardroom for his friend and business associate, Raj Rajaratnam, who reaped enormous profits from Gupta's breach of duty," 43-year-old Bharara, an Indian-American who became US Attorney for the Southern District of New York in 2009, said.
Gupta's lawyer Gary Naftalis said that his client was innocent.
Gupta "did not trade in any securities, did not tip Rajaratnam so he could trade, and did not share in any profits as part of any quid pro quo," Naftalis said in a statement.
Naftalis, said that Gupta, a former longtime top senior partner and director at management consultancy McKinsey & Company, only had legitimate communications with Rajaratnam.
"The government's allegations are totally baseless," he said. "The facts in this case demonstrate that Mr. Gupta is innocent of any of these charges and that he has always acted with honesty and integrity. ... We are confident that these accusations which are based entirely on circumstantial evidence cannot withstand scrutiny and that Mr. Gupta will be completely exonerated of any wrongdoing."
The court has set a trial date of April 9, 2012. Motions are expected to be filed in the case by January 3 and on January 5, the defence and prosecutors will discuss other administrative procedures in the high-profile case.
Harvard-educated Gupta made his first appearance in US Magistrate Court before Judge Kevin Fox after being indicted on six counts of securities fraud.
He was arraigned before Jed Rakoff in the US District Court, Southern District of New York. He was released on a USD 10 million bond.
The insider trading by Rajaratnam and others produced more than USD 18 million in illicit profits and loss avoidance, the Securities and Exchange Commission has said.
Gupta will have to pay a cumulative fine of over USD 25 million if convicted. On the conspiracy charge, he faces a maximum fine of USD 250,000 or twice the gross gain or loss accrued from the crime.
For each of the securities fraud charges, he faces a maximum fine of USD 5 million or twice the gross gain or loss derived from the crime.
Gupta, who appeared in court wearing a light blue shirt, has also been ordered to turn over his passport, with travel limited to the continental United States.
A US Attorney's office official said Gupta has been "released by his own signature."
A total of 56 people have been charged in insider trading cases since Bharara assumed office shortly before Rajaratanam's arrest in October 2009.
FBI Assistant Director-in-Charge Janice Fedarcyk said Gupta's arrest was the latest under an initiative launched by the FBI in 2007 against hedge fund cheats.
"The conduct alleged is not an inadvertent slip of the tongue by Mr. Gupta," she said.
"His eagerness to pass along inside information to Rajaratnam is nowhere more starkly evident than in the two instances where a total of 39 seconds elapsed between his learning of crucial Goldman Sachs information and lavishing it on his good friend," she said.
