Wednesday, 4 May 2016
Last updated 51 min ago
Feb 8 2012 | 3:17pm ET
It promises to be an interesting three-and-a-half month run-up to Rajat Gupta's insider trading trial, as both sides continued to bicker and prosecutors promised additional allegations against the former McKinsey & Co. chief.
Gupta pleaded not guilty to a superseding indictment against him filed last week, adding a new insider-trading charge stemming from a March 2007 Goldman Sachs board conference call, confidential information from which he allegedly leaked to Galleon Group's Raj Rajaratnam. Prosecutors said they are continuing their investigation and may add further charges, although Rakoff said he wouldn't allow them.
But Gupta's legal team won its own victories yesterday, gaining a delay in the start of the trial from April 9 to May 21 to allow them to prepare, and possibly a big piece of reasonable doubt come trial.
Rakoff said yesterday that prosecutors disclosed that Rajaratnam may have had another insider at Goldman, where Gupta served as a director. That source, known as "Mr. X," did not offer tips on either Goldman or Procter & Gamble, another company on whose board Gupta served and about which he is alleged to have tipped Rajaratnam, but Rakoff pushed prosecutors to identify him. Meanwhile, Gupta's lawyer is preparing to demand documents from prosecutors and the Securities and Exchange Commission at a Feb. 16 hearing.
While Rakoff said the trial will move ahead on May 21 "barring an act of God," prosecutors said they "hope to get more time to get more charges against Mr. Gupta." But with Rakoff's opposition to another superseding indictment, prosecutors said they will push to admit evidence of the alleged crimes they stem from at the trial.
"What the government is doing here now is wildly expanding what everybody in the world believed the case to be about," Gupta lawyer Gary Naftalis said. "I really think it's quite unfair."
"It's time for them to stop and try the case they brought," he added.