Rajat Gupta Asks Judge to Dismiss Fraud Charge
Rajat Gupta, the former Goldman Sachs Group Inc. (GS) director accused of insider trading as part of the Galleon Group LLC investigation, asked a federal judge to dismiss one of six securities fraud charges against him.
An allegation that Galleon co-founder Raj Rajaratnam bought at least 350,000 shares of Goldman Sachs in March 2007 after getting a tip from Gupta should be dismissed because the indictment doesn’t say that Gupta communicated with Rajaratnam before the alleged trade, Gupta’s attorneys said in a filing yesterday in federal court in Manhattan.
The allegations about the purchase of Goldman Sachs shares are vague and “make it impossible to identify the particular transactions” at issue in the charge, the attorneys said in the filing.
Gupta, the one-time McKinsey & Co. leader and former director at Procter & Gamble Co. (PG), was accused in October by Manhattan U.S. Attorney Preet Bharara of passing inside information to Rajaratnam, co-founder Galleon Group. The U.S. says Gupta tipped Rajaratnam about Goldman Sachs and P&G earnings.
In a revised indictment filed last month, prosecutors expanded their description of the insider-trading scheme, saying it began in March 2007, not in 2008, as the U.S. alleged when Gupta was first charged in October.
Revised Indictment
Gupta now faces six counts of securities fraud and one count of conspiracy. In the new indictment, prosecutors added a charge based on a March 12, 2007, conference call in which people discussed Goldman Sachs’s pending earnings announcement. Gupta tipped Rajaratnam after listening to a Goldman Sachs board meeting while at Galleon’s offices, the U.S. said.
Gupta has pleaded not guilty.
He faces as long as 20 years in prison if convicted of any of the securities fraud charges and as long as five years if convicted of conspiracy. He also faces a fine of as much as $5 million, prosecutors said.
The case is U.S. v. Gupta, 11-907, U.S. District Court, Southern District of New York (Manhattan).
To contact the reporter on this story: Karen Gullo in San Francisco at kgullo@bloomberg.net
To contact the editor responsible for this story: Peter Blumberg at pblumberg1@bloomberg.net
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