India-born former Goldman Sachs director Rajat Gupta's latest bid to have his insider-trading conviction overturned should be rejected, prosecutors have told an appeals court here, asserting that he got a fair trial and the jury convicted him for his "criminal" conduct. In a lengthy brief filed before the US Court of Appeals for the Second Circuit this month, US Attorney for the Southern District of New York Preet Bharara said Gupta's conduct of repeatedly tipping his business partner Raj Rajaratnam with material non-public information in "ways that furthered Gupta and Rajaratnam's shared financial interests" remains "criminal" and he is "not actually innocent".
Bharara said Gupta's appeals from an order denying his motion to vacate, set aside, or correct his sentence should be rejected and he is not entitled to the relief he seeks.
In May, Gupta, 66, had filed an exhaustive brief in the appeals court, arguing that the judgement of the Manhattan district court finding him guilty of insider trading "should be reversed" and his "conviction should be vacated".
Gupta's appeal came on the back of a landmark ruling by the Manhattan appeals court that for an insider trading conviction prosecutors must show that a defendant received a personal benefit for passing illegal tips. Gupta's lawyers have cited the ruling that led to the reversal of insider convictions of hedge-fund managers Todd Newman and Anthony Chiasson in December 2014.
Asserting that there is no legal basis to overturn Gupta's verdict, Bharara said Gupta was convicted by a jury in a "fair trial" for "repeatedly and brazenly" disclosing material non-public information to Rajaratnam in violation of the fiduciary duties Gupta owed to Goldman Sachs and Procter and Gamble, companies on whose boards of directors he served. "This conduct, which was motivated by Gupta's substantial financial entanglements with Rajaratnam and his multi-billion dollar hedge fund, is as criminal today as it was before Newman," Bharara said. "Gupta received a fair trial before a properly instructed jury; that jury simply agreed with the government's evidence of guilt, rejected Gupta's proffered defences and convicted Gupta for the conduct he committed. There is no legal basis to disturb that verdict," he said.
The top federal prosecutor in Manhattan noted that at no point did the District Court instruct the jury to convict Gupta based on a Newman-invalidated "mere friendship" theory of benefit.
"Indeed, the 'friendship' does not appear in the jury instructions at all. The District Court instead instructed the jury that tipping in furtherance of Gupta's good and frequent business relationship with Rajaratnam would suffice under the law. Newman says nothing to the contrary," he said.