All that remained were the tears of Rajat Gupta’s family.
Gupta's saga ended – for the moment at least – at the U.S. Federal Courthouse as U.S. District Judge Jed S. Rakoff sentenced the disgraced former director of Goldman Sachs & Co. to two years in prison and a $5 million fine.
Some of those tears may well have been tears of relief. The former managing director of global consulting firm McKinsey & Co, faced up to 25 years in jail for his convictions on three counts of securities fraud and one count of conspiracy.
Judge Rakoff, a critic of federal guidelines, is known for imposing sentences below the guidelines, which, for Gupta, could have ranged up to 10 years. A study by the Wall Street Journal shows that since 2010, Judge Rakoff has imposed sentences averaging just 21 months in insider trading cases, 38 % below federal guidelines.
The proof of Gupta’s guilt “was not only overwhelming, it was disgusting,” Judge Rakoff said in handing out the sentence. Gupta sat expressionless but looked “haggard and strained” the New York Times reporter Peter Lattman wrote. His daughters were in tears.
As we now know, Goldman Sachs would have collapsed the night Warren Buffett made his $5 billion investment. Others didn’t know then, but Goldman’s board certainly did. There is no way that Gupta was unaware he had critical non-public information. The jury said he told Raj Rajaratnam. And Rajaratnam made $900,000 overnight.
Gupta’s travails are not over. He is appealing the convictions, but generally appeals don’t go in favour of the defendant unless the appellate court finds an egregious malfeasance of justice. A failed appeal can be doubly damaging: It will affirm Gupta’s guilt and it will expose him to enormous legal bills. Under Goldman Sachs’ indemnity plan for directors, the investment bank has reluctantly paid some $30 million in legal fees on Gupta’s behalf. If he loses the appeal he will become liable for all legal costs.
Worst of all is the damage to the reputation of Gupta, McKinsey and other entities in which he has been involved. McKinsey, for example, thrives on its reputation for client confidentiality. If its former Managing Director and at least one other partner betrayed that trust, for how long have they been doing it? And who else has done so?
The trashing of McKinsey’s reputation began early last year when the Securities and Exchange Commission launched an “administrative proceeding” against Gupta. On March 1, 2011, CNBC.com Senior Editor, John Carney, pointedly noted that Gupta had intimate inside information of P&G’s $61 billion bid for Gillette in 2005. Gupta, Carney said, had conceptualised the deal with P&G chairman, A.G. Lafley. Before the bid was announced, options on Gillette’s stock price shot up, netting some traders one-day profits of 500%. Carney is careful to say that Gupta denied any charges but the implication is clear that insider tips existed at McKinsey years long before 2008.
The news is not totally bad for Gupta. White collar criminals aren’t often shipped “up the river” to Sing Sing maximum security prison. They are usually sent to one of the “Club Feds” – minimum security camps with tennis courts and ample visitation. Gupta is probably headed to the medium security Federal Correctional Institution in Otisville, NY, near the Pennsylvania and New Jersey borders.
But prison is still prison. Rajat Gupta will enter jail a convicted felon and, even after a short term, will emerge a felon, That he was sentenced at the end of Durga Puja, Bengal’s holiest festival, makes the pain deeper for this devotee of the Bhagavad Gita.
Subrata N. Chakravarty is former Assistant Managing Editor of Forbes
If you want to revel in your self certification that Bengalis are angels and south Indians are crooks, well be happy with that feeling of yours. Whole world knows what each group is and I do not like generalisations bcz good and bad exist every where including the Bongos..
I have my real sympathy for R.Gupta and felt quite sad about his sentence. How many can make it to the level he made? And that too as an orphan.
But then if a court of law has passed judgement, well, one must respect it. That is the basic civility expected of a law abiding citizen.
Subroto Roy is the biggest crook and he is ordered by Supreme court to pay back the 25K crores collected from scores of gullible investors. Do not be too glad about this Bango. He is a national shame.
SANDILYA, CHENNAI, INDIA >> If an Indian is holding such a position, can you still say there is racism? Or is it bcz you have deep sympathies for your fellow Bengali?
<< Well Shandilya, there are Indians, or PIO's like Preet Bharara, who in order to please their new slave-masters would go overboard to put another fellow Indian in trouble to the dock to score some brownie points. As regards sympathies on fellow Bengali, yes I do have sympathies on folks with modest means, but I despise the miilionaires, and in fact take pride over the fact that other than Rajat Gupta and Subroto Roy, there`s no multi-millionaire in the ranks of Bengalis worldwide. In other words, Bengalis are not crooks of the first order, either by nature, or by nurture, unlike you South Indians whose penchant for stashing billions inside the vaults of temples, from Puttapurty to Travancore, would put the black money hoarders of the country to shame.
Gupta probably figured he "deserved" to make money on illegal trades, since he does so much charity work. That was stupid of him; but in Gupta, the state found another sacrificial lamb offered to appease the masses. What about the rest of the Wall Street con artists who not only are guilty of insider trading but who contributed to the 2008 economic collapse?
But not a single bankster has gone to jail for their crimes against America and humanity.
Watch The Inside Job online now and share with all:
>> "The expensive US lawyers (USD 30 mil expensive) came up with the usual strategy of humanizing the criminal in order to get a soft sentence. " - Kishore
That is better than we Indians denying that the crime even took place, if "inconvenient" (or convenient?) names are involved. It took much less time for the American judiciary to deliver the verdict in a tricky and ill-defined crime, compared to how we deal with open-shut cases in India.
What a farce?
The expensive US lawyers (USD 30 mil expensive) came up with the usual strategy of humanizing the criminal in order to get a soft sentence. Ofcourse they succeeded. He would spend 6 months in a resort and get out on parole. It does not matter:
1. how many degrees he collected or what he achieved ?
2. if he wouldve gone scot free in India, since he was based in US.
Rajat Gupta has harvested what he sowed. The “overwhelming" and "disgusting" proof of his misdeeds against him notwithstanding, he has got away lightly. He should be grateful to the Court. If he challenges the verdict, let him do so at his own peril. Rajratnam, tipped by him, had made $900,000 over ngiht, which, ipso facto proves his critical involvement.
However, surprise of surprises was that there were some venerable personalities who, prior to the verdict, had advocated leniency for Rajat Gupta. They have left behind bad historical precedent by doing so. In India, Rajat would have got away with all these sheddy deeds under any clime. Unfortunately for him he did it in USA, certainly bad place for such thing and at a bad hour when financial worldview was totally gloomy and dark.
I congratulate Preet Bharara and welcome the verdict though feel sorry for his daughters and wife who had relied on a bad character for whole of their life. Thier trust too have been undermined. How could he look into their eyes after this?
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