| NEW YORK, June 16
NEW YORK, June 16 A day before he is scheduled
to begin serving a two-year prison sentence for insider trading,
former Goldman Sachs Group Inc director Rajat Gupta asked
a federal appeals court to reduce a $13.9 million civil penalty
and shorten his lifetime ban from serving as an officer of a
Gupta's lawyer, Seth Waxman, told the 2nd U.S. Circuit Court
of Appeals in New York that the penalty was excessive given that
Gupta separately was ordered to pay $6 million in restitution to
Goldman Sachs and $5 million in criminal fines.
But David Lisitza, a lawyer for the U.S. Securities and
Exchange Commission, said the $13.9 million penalty was
appropriate given the brazen nature of Gupta's actions, even
though he did not personally profit.
"This is the insider trading case of our century so far," he
Gupta, 65, was convicted in June 2012 of passing
confidential tips he heard at Goldman board meetings to his
friend, former hedge fund manager and billionaire Raj
Rajaratnam. Rajaratnam, the founder of Galleon Group, is serving
an 11-year prison term for insider trading.
Gupta is set to report to federal prison on Tuesday, the
same day that Rajaratnam's younger brother, Rengan, goes on
trial in New York on insider trading charges.
A three-judge panel of the 2nd Circuit previously denied
Gupta's appeal of his conviction; he has asked the full circuit
to rehear his argument.
Gupta, also the former global managing director of the
consulting firm McKinsey & Co, is the highest-ranking corporate
official to be convicted in the government's insider trading
probe that has convicted 81 people at trial or through guilty
pleas since August 2009.
U.S. District Judge Jed Rakoff in Manhattan federal court
oversaw Gupta's criminal trial as well as a parallel civil case
brought by the SEC that led to the $13.9 million fine and the
In sentencing Gupta to prison, Rakoff said he was unlikely
to commit similar crimes in the future. But Rakoff nevertheless
later imposed the lifetime ban that the SEC sought.
Waxman, a former U.S. solicitor general, argued on Monday
that Rakoff had essentially come to opposite conclusions based
on the same facts, prompting Circuit Judge Barrington Parker to
ask Lisitza how the same judge could make a "180-degree" turn.
Lisitza responded that the risk of recidivism necessary to
lock someone "in a cage" was different than that required to
"keep him out of the boardroom."
Meanwhile, Gupta was dealt a setback on Monday when the U.S.
Supreme Court declined to hear Rajaratnam's appeal of his own
conviction. Both men objected to the government's use of
wiretaps against them.
(Reporting by Joseph Ax; Editing by Noeleen Walder, Bernard