The US District Court for the Southern District of New York [official website] on Wednesday sentenced [order, PDF] Rajat Gupta, former Goldman Sachs director, to one year in prison, one year of supervised release and a $5 million fine for his securities fraud convictions. Gupta was convicted [JURIST report] in June of three counts of securities fraud and one count of conspiracy to commit securities fraud for his involvement in insider trading with hedge fund founder Raj Rajaratnam [JURIST news archive]. In his opinion, Judge Jed Rakoff discussed the "bizarre results" that can happen in sentencing, noting that the US Sentencing Guidelines [Cornell LII backgrounder] only assign two points to his main offense, abuse of a position of trust, but assign 18 points to the resultant monetary gains by others even though Gupta did not receive any monetary gain. However, he said, Gupta
well knowing his fiduciary responsibilities to Goldman Sachs, brazenly disclosed material non-public information to Mr. Rajaratnam at the very time, September and October 2008, when our financial institutions were in immense distress and most in need of stability, repose, and trust.Gupta is ordered to be imprisoned by 2 PM on January 8, 2013.
Rajaratnam, Gupta's co-conspirator, began his 11-year prison sentence at a Massachusetts military base last December after he was sentenced [JURIST reports] a month earlier. Along with his prison sentence, he was given a $92.8 million fine, the largest ever imposed on an individual for insider training. He was convicted [JURIST report] of 14 counts of insider trading. Goldman-Sachs settled for $550 million [JURIST report] with the US Securities and Exchange Commission (SEC) [official website] in 2010 after the SEC filed suit [JURIST report] against the company for securities fraud.