New York: Last year on Diwali, former Goldman Sachs director Rajat Gupta arrived at the federal courthouse in downtown Manhattan to surrender to the FBI and face criminal insider trading-related charges. His family and friends then said they believed it was an auspicious day and the gods would protect him. Today, on Dusshera, the India born Gupta arrived in court to hear his sentence after being convicted on four counts of leaking boardroom secrets to the hedge fund manager Raj Rajaratnam.
He was wearing his staple dark suit and tie but looked drained, more than he has at any point over his month long trial. His wife Anita wore dark glasses throughout the proceedings, often keeping her head bowed, and her eyes closed as if in prayer. His four daughters sat side by side frequently wiping away tears.
While he declined to testify at his trial, Rajat took up the judge's offer to address the court today. Speaking out for the first time since the charges were filed against him the former McKinsey Director and Member of the Goldman Sachs Board read out from a prepared statement. "The last 18 months have been the most challenging of my life since I lost my parents as a teenager. I regret terribly the impact on my family, friends, and institutions that are dear to me." (Watch)
There was pin drop silence in the court room as this was the first time Gupta has publicly spoken since his involvement in the Rajaratnam insider trading scheme shocked the business world. Gupta plans to appeal the conviction, which requires him to report to prison on Jan. 8 and also pay $5 million in fines and so his statement was a carefully calibrated one. While he apologized for bringing negative attention to his former employer, the nonprofit organizations he led, and his family, he did not apologize for committing the three counts of securities fraud and conspiracy that he was convicted of in June.
Gupta's legal team have vowed to appeal his conviction and Manhattan based attorney and legal ethics specialist Cyrus Mehta says they have a case. "The whole conviction was based on wiretap and there is an issue as to whether the government obtained that wiretap legally. Even if the government wants to investigate wrongdoing it must do so properly. It cannot trample the constitution" explains Mehta.
Rajat Gupta's defense team tried unsuccessfully to keep their client out of jail, saying that the loss of his reputation was a punishment far worse than prison. Gupta's lawyer, Gary Naftalis described it as "This is a fall from grace of Greek tragedy proportions." According to Gupta's defense team his actions were an aberration in an otherwise laudatory life. But the judge was having none of that. "He is a good man," Judge Jed S. Rakoff said of Mr. Gupta "But the history of this country and the history of the world is full of examples of good men who did bad things."
Judge Rakoff clearly struggled with coming to a decision on the sentence. "Imposing a sentence on a fellow human being is a formidable responsibility," he said as he prepared to announce his decision. Known for speaking his mind U.S. District Judge Jed Rakoff called the jury's verdict "totally warranted" and labeled the illicit tips as "disgusting." insider trading a "very serious crime," one that feeds "cynicism among average investors that financial markets are rigged." He explained that while no defendant should be made a martyr to public passion, meaningful punishment is still necessary to reaffirm society's deep-seated need to see justice triumphant.
Tonight, Rajat Gupta is home with his family. The judge refused Mr. Gupta's request to remain free while he appeals his case and Gupta will have to surrender to federal prison authorities by Jan. 8.In the end, as Ravi Batra, Board member of New York State's Public Ethics Commission put it, the law has been vindicated, Main Street has been protected and Wall Street has been warned.