India-born ex-Goldman Sachs director Rajat Gupta's conviction on insider trading charges should not be thrown out as the government provided "overwhelming" proof against him for passing on illegal information in return for "expected potential pecuniary gains," US prosecutors said.
The prosecutors said the IIT and Harvard-educated former McKinsey head, who is serving a two-year sentence, had a "powerful" financial incentive to tip his billionaire hedge-fund operator friend Raj Rajaratnam.
Attorney for the Southern District of New York, Preet Bharara, submitted a memorandum on behalf of the government opposing Mr Gupta's plea to throw out his conviction based on a recent ruling by an appeals court in which it reversed the insider convictions of hedge-fund managers Todd Newman and Anthony Chiasson.
Mr Gupta, 66, is seeking to set aside his conviction, based on the Second Circuit's decision in the case against Newman, in which the court ruled that prosecutors must show that a defendant got a personal benefit for passing illegal tips.
Stressing that the personal aspect of Gupta-Rajaratnam relationship was "undeniable," the government said Mr Gupta personally invested in Galleon and participated in several actual and contemplated ventures with him.
"As part of their business relationship, each had shared expectations. Mr Rajaratnam expected, and Gupta consistently delivered, inside information that Mr Gupta possessed as a corporate insider. For those tips, Mr Gupta clearly expected potential pecuniary gain in return," the prosecutors said.
"What was good for Galleon was good for Mr Gupta," they said.
Prosecutors rejected Mr Gupta's petition, saying he "ignores or misconstrues this damning evidence" of his financial self-interest to tip Mr Rajaratnman and seeks refuge in Newman's newly-articulated personal benefit standard.
The government said the pattern of Mr Gupta's conduct was "simple and blatant" and he routinely disclosed inside information about Goldman Sachs and Proctor & Gamble to Mr Rajaratnam, who is currently serving an 11-year-prison term in a Massachusetts prison.
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