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Insider trading case: Big names urge mercy for Westporter's sentencing

Bloomberg
Published 6:11 am, Tuesday, October 16, 2012
  • Rajat Gupta, center, a former Goldman Sachs Inc. director and senior partner at McKinsey & Co., arrives with his attorneys at federal court in New York, U.S., on Thursday, June 7, 2012. Microsoft Corp. Chairman Bill Gates was among supporters of Gupta who wrote letters urging mercy at his sentencing next week for his part in a hedge fund insider trading scheme. Photo: Peter Foley, Bloomberg / © 2012 Bloomberg Finance LP
    Rajat Gupta, center, a former Goldman Sachs Inc. director and senior partner at McKinsey & Co., arrives with his attorneys at federal court in New York, U.S., on Thursday, June 7, 2012. Microsoft Corp. Chairman Bill Gates was among supporters of Gupta who wrote letters urging mercy at his sentencing next week for his part in a hedge fund insider trading scheme. Photo: Peter Foley, Bloomberg

 

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Microsoft Corp. Chairman Bill Gates and former United Nations Secretary-General Kofi Annan are among supporters of ex-Goldman Sachs Group director Rajat Gupta who urged mercy at his sentencing for his part in the biggest hedge fund insider trading scheme in U.S. history.

Gupta, a Westport resident, is to be sentenced Oct. 24 for leaking stock tips to Galleon Group LLC co-founder Raj Rajaratnam, who masterminded the conspiracy. In letters to U.S. District Judge Jed Rakoff in Manhattan, Gates, Annan and at least 200 others wrote on behalf of Gupta, who faces up to 20 years in prison on the most serious of the four counts of which he was convicted.

"I urge you to recognize Rajat for the good that he has done in this world, to give him the credit that he deserves for helping others, and to take into account his effort to improve the lives of millions of people," Annan said of Gupta's work to reform the UN's management. Gates wrote "I wanted to add my voice to those of other friends and colleagues of Rajat Gupta who are writing to you in order to round out Rajat's profile," noting his service as chairman of an organization fighting AIDS, tuberculosis and malaria.

Gupta is the most prominent of the 69 people convicted since a nationwide insider trading crackdown by U.S. prosecutors and the FBI began in 2009. Besides his tenure at New York-based Goldman Sachs, Gupta served as managing partner of McKinsey & Co. from 1994 to 2003 and on the boards of Procter & Gamble Co., the Rockefeller Foundation and the Bill & Melinda Gates Foundation.

Gupta, 63, was found guilty in June of three counts of securities fraud and one count of conspiracy. Securities fraud carries a maximum prison term of 20 years, though Gupta will probably be sentenced to fewer years under federal guidelines.

After a four-week trial, a federal jury in Manhattan said Gupta tipped Rajaratnam, 55, about dealings at New York-based Goldman Sachs, including information about a $5 billion investment by Warren Buffett's Berkshire Hathaway Inc. on Sept. 23, 2008, and a tip on a quarterly loss. Rajaratnam is serving 11 years in prison for trading on tips from Gupta and others.

Writers of the letters on Gupta's behalf, made public Oct. 12, included Gupta's family and former associates in the worlds of academia, business and charity.

Among them were Kushal Pal Singh, the billionaire chairman of DLF Ltd., India's largest developer; Leonard Lauder, the chairman emeritus of Estee Lauder Cos.; and Mukesh Ambani, India's richest man and the chairman of Mumbai-based Reliance Industries Ltd., the world's largest refining complex.

Singh credited the Kolkata-born Gupta with bringing Microsoft's Gates to India and with helping DLF create an urban development initiative there. Because of the prosecution, Gupta's charitable works in India have been at a "standstill," he said.

"We as a society need more visionaries like Rajat Gupta," Singh wrote. "Rajat Gupta is no threat to anyone inside or outside the prison fence."

Other writers included Ajit Jain, Berkshire's reinsurance chief; Judith Rodin, president of the Rockefeller Foundation; Amartya Sen, a Harvard University professor; and author Deepak Chopra.

Chopra called Gupta "compassionate, caring, selfless and dedicated" and cited his work helping found the Indian School of Business in Hyderabad.

"I think Rajat has tremendously contributed to humanity," Chopra said.

Jain, who testified at the trial as a defense witness, talked about his long friendship with Gupta and family. Jain said Gupta has already "been disgraced personally and professionally."

Jain said Gupta "customarily chided me during our social meetings to become more active in philanthropic causes" and said he never saw Gupta abuse "his many positions of trust for personal gain."

"On no occasion of our meetings did Rajat ever seek to inappropriately obtain or leverage information or opportunity by speaking with me, and I would have considered even a mild effort in that regard to be completely foreign to his character," Jain wrote.

Gupta's wife, Anita, wrote an account of meeting her husband in 1968 at the Indian Institute of Technology, where she was the only girl in a class of 250 and he was "a big man on campus."

"I have never forgotten his kindness to the very shy, quiet, small-town girl who felt so out of place," she said.

She told the judge the case has been "devastating" for her family. "Never in my wildest dreams" did she imagine she would be "separated from my husband in this way."

She recounted how Goldman Sachs Chief Executive Officer Lloyd Blankfein "loudly gave Rajat an ultimatum that he had to choose between Goldman and KKR," citing a 2008 offer he received to join KKR & Co. as an adviser. Gupta, who joined Goldman Sachs' board in 2006, opted for KKR, then agreed to a request by Goldman Sachs that he return when the financial crisis hit, she said.

"I tried very hard to counsel Rajat against it because I felt he had been treated unfairly by Goldman Sachs," she wrote. "He felt he owed Goldman Sachs his loyalty."

Michael DuVally, a spokesman for Goldman Sachs, declined to comment on Anita Gupta's letter. Gupta left Goldman Sachs' board in 2010.