Former Goldman Sachs Group Inc board member Rajat Gupta is convicted of illegally tipping his hedge-fund manager friend Raj Rajaratnam with bank secrets.
NEW YORK, NEW YORK, UNITED STATES (JUNE 15, 2012) (REUTERS) -Former Goldman Sachs Group Inc board member Rajat Gupta was convicted on Friday (June 15) of illegally tipping his hedge-fund manager friend Raj Rajaratnam with secrets about the investment bank, a major victory for prosecutors seeking to root out insider trading on Wall Street.
A Manhattan federal court jury found Gupta guilty of three counts of securities fraud and one count of conspiracy, ending the four-week trial. He was found not guilty on two other securities fraud charges.
The jury delivered the verdict on the second day of its deliberations. U.S. District Judge Jed Rakoff has set sentencing for October 18.
The verdict marks a stunning fall for Gupta, who is also a former top executive at business consulting firm McKinsey & Co and a former director of Procter & Gamble.
After the verdict, Gary Naftalis, Gupta's defense lawyer said, "We are obviously pleased by the positive result of the verdict, including the fact that he was acquitted of a number of charges including the only substantive charge relating to Procter & Gamble. We are obviously disappointed by the conviction on other charges and those charges were the charges that were supported by the hearsay wiretaps of Mr. Rajaratnam, which we legally challenged and will continue to legally challenge. He was acquitted on counts where they were no hearsay wiretaps of Mr. Rajaratnam."
After the verdict, Gupta and his family shared a hug in the courtroom.
Gupta's one-time associate Rajaratnam, who was convicted of 14 counts of insider trading at a trial last year, is now serving an 11-year prison term.
Since being implicated in the Rajaratnam case more than a year ago, Gupta has denied the charges and vowed to put on a vigorous defense. At trial, his lawyers argued that prosecutors "had no real, hard, direct evidence" against Gupta, who did not take the witness stand.
"We've always believed in Mr. Gupta's innocence. We continue to believe in Mr. Gupta's innocence on these charges, and we continue to fight for his innocence, think he's an honorable man," added Naftalis.
The U.S. government crackdown on insider trading has led to guilty verdicts or plea bargains of scores of executives, lawyers and financial consultants.