Gupta Seeks Dismissals And Tossing Of Wiretaps

Jan 5 2012 | 2:08pm ET

Former McKinsey & Co. chief Rajat Gupta has asked a federal judge to toss charges that he passed confidential tips to Galleon Group founder Raj Rajaratnam.

Lawyers for Gupta, who allegedly used his positions on the boards of directors of Goldman Sachs and Proctor and Gamble to tip his friend Rajaratnam, asked U.S. District Judge Jed Rakoff to dismiss some of the five counts against their client, noting that "the indictment focuses on just two instances in which Mr. Rajaratnam is said to have traded on inside information he supposedly received from Mr. Gupta, but improperly uses those instances to create five purportedly separate substantive securities charges."

Speaking of substance, Gupta' lawyers also asked for a "bill of particulars" clarifying the indictment against their client. And they, like the lawyers for all of the other defendants charged in the case to go to trial, asked him to disallow prosecutors from using thousands of wiretaps at the heart of the Galleon case. None of those previous attempts have succeeded, and Rakoff himself last year rejected such a bid from one of the defendants in an expert-network insider-trading case.

"It appears that the government intends to offer a circumstantial case, premised on the timing of alleged telephone calls between the two men and trades that Rajaratnam caused the hedge funds he managed to executive," Gary Naftalis, Gupta's lawyer, wrote. "It further appears that the government will attempt to prop up its case with recordings it obtained by wiretapping Rajaratnam's cellular phone," wiretaps that were, the defense argues, illegal.

Gupta of tipping Rajaratnam off about several matters he learned about while serving on Goldman's board, including a surprise loss by the bank in 2008 and a $5 billion investment by Berkshire Hathaway in the same year. At Rajaratnam's trial—Gupta did not testify, but his voice was heard on several wiretapped telephone calls with Rajaratnam—Goldman CEO Lloyd Blankfein said that the information passed by Gupta to the hedge fund manager was confidential.

Gupta's lawyers also offered a peak at their defense, noting that they plan to use the government's words against it. With prosecutors relying on Rajaratnam's wiretapped statements to damn Gupta, Gupta's lawyers plan to point out that the government doesn't believe a word Rajaratnam says.

"Any such statement, in which the government expressed its own doubts about Rajaratnam's veracity—or simply that he is not to be trusted, even if stopping short of calling him a liar—would obviously be helpful to the defense," Naftalis wrote.

Gupta was set to appear in court today for a pre-trial conference. His trial is set to begin in April.


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.