Rajat Gupta sentenced to two years in prison, fined $5 mn

New York: Former Goldman Sachs director Rajat Gupta was sentenced to two years in prison by a Manhattan federal court for insider trading. He will also have to pay a $5 million fine. The verdict was a semi-victory for Gupta and legions of his supporters who had fought hard and long to get him a lenient sentence. Prosecutors had been seeking 10 years in prison for Gupta passing on illegal tips while his own lawyers argued he should get probation and community service only because he didn’t actually profit from the crimes. _Firstpost_ had noted earlier that Gupta would likely get a light sentence than prosecutors had been seeking. In particular, US attorney Preet Bharara had determined that a sentence of 8-10 years was  just right for the insider trading offense that Gupta was convicted of on 15 June. On the other hand, Gupta’s legal team had asked for no jail time — just community service. Some big names, including Bill Gates and Kofi Annan, had asked the judge to spare Gupta from prison [caption id=“attachment_500577” align=“alignleft” width=“380”]  The two-year jail sentence represents a semi-victory for Rajat Gupta.. AFP[/caption] Gupta was convicted in June of three counts of securities fraud relating to tips about Goldman and one count of conspiracy. But he didn’t trade or profit from passing secrets he learned, while serving on the board of directors of Goldman Sachs, to Raj Rajaratnam, the founder of hedge fund Galleon. The courts sent a shock message to Wall Street in May last year by sentencing Rajaratnam, the hedge fund billionaire, to 11 years in prison, one of the longest prison terms in history for insider trading. But in the lead up to Gupta’’s sentencing, media accounts had drawn a distintinction between Gupta and Rajaratnam. Slate magazine had observed that  Gupta passed on inside information about one company to Rajaratnam, whereas Rajaratnam had traded on confidential information collected from many sources. Judge Jed S. Rakoff, who sentenced Gupta, has a record of imposing sentences considerably below federal sentencing guidelines than some other judges do. Since 2010, Judge Rakoff has imposed an average sentence of 21 months on insider-trading defendants who didn’t cooperate with prosecutors — about 38 percent below the guideline minimum, according to a Wall Street Journal analysis. Ahead of the sentencing, the media had also focussed on Gupta’s record of philanthropy as a mitigating circumstances. The Journal highlighted that Judge Rakoff had said that the most important factor for him is “the essential character” of the defendant: whether “fundamentally he was a greedy person” or a good person who “departed from their better impulses.” The need to send a message was the second most important, he had said. Forbes had said that the judge was known for giving credit, a lesser prison term, to those like Gupta who have shown that they have lived an honorable life up until the time of their offense. “Gupta, with over 200 letters asking for mercy at sentencing and a well-documented history of service to humanity, will present a convincing case for Rakoff to consider,”  Forbes had said.