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

Steinbrugge: Top 10 Hedge Fund Industry Trends for 2017

Jan 3 2017 | 9:03pm ET

Each year, Agecroft Partners' Don Steinbrugge predicts the top hedge fund industry...

Lifestyle

'Tis the Season: Wall Street Holiday Parties Back In Fashion

Dec 22 2016 | 9:23pm ET

Spending on Wall Street holiday parties has largely returned to pre-2008 levels...

Guest Contributor

DarcMatter: The Top Trends in Alternative Investments for 2017

Jan 13 2017 | 8:22pm ET

The $7 trillion alternative investments industry is poised for continued growth...

 

From the current issue of

Securities and Exchange Commission Chair Mary Jo White will step down as chair of the nation’s Wall Street overseer in January, setting the stage for a potential conservative shift in the regulator’s leadership under the incoming Donald Trump administration.