“I think record bears out that he is a good man. But history is full of examples of good men who did bad things.” The acceptance that he was dealing with the “aberrant” actions of an “extraordinary man” was the foundation of US District Court judge Jed S Rakoff’s sentence in the insider trading case involving former Goldman Sachs board member Rajat Gupta.
Gupta, who was found guilty of leaking boardroom secrets to former hedge fund manager Raj Rajaratnam by a jury in June, will have to spend two years in jail and pay a fine of $5 million. The sentence — passed early on Thursday India time — was much more lenient than the maximum of eight years stipulated by US sentencing guidelines. The judge concluded that Gupta’s actions were the functional equivalent of stabbing Goldman Sachs in the back.
The hearing in an overflowing courtroom (an additional room was arranged for the screening of the proceedings) had its elements of drama. The judge was leaving after reading out the sentence when the defence sought further relaxations. The court agreed to push the surrender date to January 8, 2013, so that Gupta could spend the holidays with his family. Judge Rakoff also agreed to assign Gupta to a medium-security prison in Otisville in New York.
The defence highlighted the philanthropic initiatives spearheaded by Gupta, including his contributions to the fight against AIDS and malaria, a fact that was acknowledged by the judge.
“The court can say without exaggeration that it has never encountered a defendant whose prior history suggests such an extraordinary devotion, not only to humanity writ large, but also to individual human beings in their times of need,” Judge Rakoff said.
Gupta’s attorney Gary P Naftalis argued unsuccessfully that his client should not be sent to prison as his “fall from grace of Greek tragedy proportions” was harsher punishment than incarceration. Judge Rakoff, however, noted that insider trading was a crime that was “easy to commit and hard to catch”, and the need for a deterrent was strong.
The defence suggested community service in Rwanda as possible punishment, a proposal that the judge termed “innovative”, but dismissed as “peace corps for insider traders”.
The judge agreed with the prosecution’s view that Gupta breached “an extraordinary position of trust”. The jury in June found that Gupta disclosed two confidential pieces of information — a $5 billion investment in Goldman Sachs by