Ex-Goldman director to stay free on bail - court

NEW YORK Wed Dec 5, 2012 2:16am IST

Former Goldman Sachs Group Inc board member Rajat Gupta (R) declines to comment as he departs Manhattan Federal Court with his lawyer, Gary Naftalis after being sentenced in New York, October 24, 2012. REUTERS/Lucas Jackson

Former Goldman Sachs Group Inc board member Rajat Gupta (R) declines to comment as he departs Manhattan Federal Court with his lawyer, Gary Naftalis after being sentenced in New York, October 24, 2012.

Credit: Reuters/Lucas Jackson

Related Topics

Stocks

   

NEW YORK (Reuters) - Former Goldman Sachs Group Inc (GS.N) board member Rajat Gupta can remain free on bail while he appeals his insider-trading conviction, an appeals court ruled on Tuesday.

Gupta had been scheduled to surrender January 8 to start a two-year prison sentence. But after hearing arguments from Gupta's lawyer and prosecutors, a two-judge panel of the 2nd U.S. Circuit Court of Appeals in New York granted Gupta's request to stay out of prison.

"Motion is granted," said Judge Jose Cabranes in a ruling from the bench.

Gupta, 64, was convicted in June of leaking Goldman boardroom secrets to Raj Rajaratnam, the Galleon Group hedge-fund manager at the center of a U.S. government crackdown on insider trading over the past four years. Gupta, also a former head of management consultancy McKinsey & Co, has been free on $10 million bail.

The former Goldman director attended the hearing with his family. After the hearing, he hugged his lawyer, Seth Waxman, and patted him on the back.

Waxman declined to comment on the appeals court's ruling. A spokeswoman for Manhattan U.S. Attorney Preet Bharara declined to comment.

The U.S. Justice Department had argued that Gupta should not be able to delay going to prison while he awaits the outcome of his appeal, which is expected to be heard by the 2nd Circuit as early as April.

At Tuesday's hearing, Waxman argued that Gupta's appeal would raise substantial questions that likely would result in his conviction being reversed.

The government hadn't proved its case, which relied on "classically inadmissible" or "entirely circumstantial" evidence, Waxman said. "It totally failed in that regard."

Waxman said the trial judge, Jed Rakoff, erred in admitting an October 24, 2008 wiretapped conversation between Rajaratnam and David Lau, a Singapore-based portfolio manager at Galleon.

On the call, Rajaratnam told Lau that he "heard yesterday from somebody who's on the board of Goldman Sachs, that they are gonna lose $2 per share." But Waxman said there was no evidence Lau traded on the tip, and the call had been focused on the general discussions of the global financial crisis.

Reed Brodsky, the prosecutor who argued before the 2nd Circuit, countered that the wiretaps show that Rajaratnam had provided information to Lau so he could also benefit from it.

"The government's evidence showed this was in furtherance of the conspiracy," he said.

The 2nd Circuit had earlier denied Rajaratnam's similar bid to remain free on bail pending his appeal, which was argued October 25. The fund manager is serving an 11-year prison sentence.

The case is USA v. Rajat Gupta, 2nd U.S. Circuit Court of Appeals, No 12-4448. (Reporting By Nate Raymond in New York; Editing by Martha Graybow, Andrew Hay and Tim Dobbyn)

FILED UNDER:

Politics

REUTERS SHOWCASE

Fund Raising

Fund Raising

Flipkart raises $700 million in fresh funding.   Full Article 

Reforms Push

Reforms Push

Modi may order insurance, coal reforms if vote delayed - officials.  Full Article 

Reuters Exclusive

Reuters Exclusive

India looks to sway Americans with nuclear power insurance plan  Full Article 

To Boost Growth

To Boost Growth

Crank up public spending to revive growth - chief economic adviser.   Full Article 

Bold Steps

Bold Steps

SpiceJet rescue plan marks bold bet on Indian aviation recovery.   Full Article 

New Airline

New Airline

Tata, Singapore Air venture Vistara to take off on Jan 9.  Full Article 

Online Sales

Online Sales

Knock knock. Who's there? Amazon's best-selling holiday author.  Full Article 

Hacking Attack

Hacking Attack

N.Korea says did not hack Sony, wants joint probe with U.S.  Full Article 

Reuters Poll

Reuters Poll

BSE Sensex to hit 32,980 by December 2015  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage