Former Goldman Sachs Director Rajat Gupta Loses Appeal, Heads To Prison

Former Goldman Sachs Group director, Rajat Gupta, lost his appeal against a $13.9 million civil penalty and a permanent ban on acting as an officer for a public company. The second US Circuit Court of Appeals rejected Gupta’s claim that ‘the penalty and the ban were excessive.’

In June 2012, a federal jury had found the 65-year-old guilty of passing confidential information to Raj Rajaratnam, the former billionaire and founder of the Galleon Group hedge fund. Rajaratnam, too, is in jail, serving an 11-year prison sentence.

Gupta was sentenced to a two-year prison term while $6 million would have to be paid to Goldman as compensation, as well as a $5 million fine. The US Securities and Exchange Commission (SEC) also filed a parallel civil action against Gupta, leading to a $13.9 million penalty and a lifetime ban from acting as a public company’s officer. Gupta had appealed against the civil sanctions and called it ‘unwarranted.’

Seth Waxman, Gupta’s attorney, had argued that the federal judge’s positions were ‘inconsistent.’ But the court said the standard in a criminal context was different from that in a civil case.