Gupta Gets Green-Light In Case Against SEC

Jul 12 2011 | 12:32pm ET

A federal judge has ruled that a former McKinsey & Co. director can sue the Securities and Exchange Commission for initiating an administrative proceeding against him rather than a civil lawsuit.

Rajat Gupta, who the SEC says passed confidential information about Goldman Sachs to Galleon Group founder and convicted insider-trader Raj Rajaratnam, did see his claim narrowed to his allegation that the regulator is seeking to deny him equal protection of the law. Gupta is the only defendant among the 29 people and companies charged by the SEC to be subject to an administrative proceeding rather than a lawsuit.

"We have the unusual case where there is already a well-developed public record of Gupta being treated substantially disparately from 28 essentially identical defendants, with not even a hint from the SEC, even in their instant papers, as to why this should be so," U.S. District Judge Jed Rakoff ruled yesterday.

Gupta has asked Rakoff to order the SEC to bring its case against him in federal court, rather than before an administrative law judge, where evidentiary rules are much less favorable to defendants. The SEC, which said it may appeal Rakoff's ruling, argued that the judge did not have the jurisdiction to stop the administrative action, and that Gupta would be able to appeal the result of the action in federal appeals court after its conclusion.

The SEC's case against Gupta has been postponed indefinitely as prosecutors continue to look into the former Goldman director.

An evidentiary hearing in Gupta's case against the SEC will be held within four months, Rakoff said.


In Depth

Q&A: Brevan Howard’s Charlotte Valeur Talks Strategy

Sep 18 2014 | 11:18am ET

Charlotte Valeur chairs the board of Brevan Howard Credit Catalysts, an LSE listed...

Lifestyle

Hedgies Rock Out For Children's Charity

Sep 15 2014 | 8:40am ET

It's that time of year again—when hedgies trade in their spreadsheets for guitars...

Guest Contributor

Volkered: How Financial Sector Reforms are Creating Opportunities for Hedge Funds

Sep 16 2014 | 11:28am ET

New regulations have dramatically curtailed proprietary trading activity in investment...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

September 2014 Cover

The London Whale: Rogue risk management

Credit default swaps brought down the London Whale and cost JPMorgan $6.2 billion. Here is how it happened.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.