New York: US regulator SEC has asked an appeals court to affirm a district court's decision that India-born former Goldman Sachs director Rajat Gupta pay a $13.9 million penalty and be banned for life from serving as director of a public corporation.
65-year-old Gupta has been granted time till April 7 to file his reply to the SEC brief. Gupta had last year in November asked the appeals court to overturn the district court's decision that ordered him to pay the $13.9 million penalty in the civil insider trading case filed against him by the SEC.
His lawyers had argued that the district court “abused” its discretion in imposing the statutory maximum civil penalty of $13.9 million, which is three times the $4.6 million in gains made by hedge-fund manager Raj Rajaratnam who traded on tips Gupta allegedly passed on to him. The lawyers said the penalty was excessive in light of Gupta already facing a five million dollar fine and two year prison sentence in the criminal insider trading case.
He has been convicted in a parallel criminal insider trading case brought against him by federal prosecutor Preet Bharara. He was sentenced to two years in prison but has appealed against his conviction and is awaiting the decision of the appeals court while on bail. The district court found that, even over a year after his conviction on multiple counts of insider trading, Gupta failed to recognise that his conduct was “improper”.
Gupta's repeated argument that he himself made no money from any of the trades is "inconsequential" since his misconduct "created substantial losses or the risk of substantial losses to other persons," even if he did not pocket any direct gains....