(Adds Gupta reporting to prison)
By Joseph Ax and Jonathan Stempel
NEW YORK, June 17 Former Goldman Sachs Group Inc
director Rajat Gupta on Tuesday began serving his
two-year prison term for insider trading, and lost his challenge
to a $13.9 million civil penalty and permanent ban from acting
as a public company officer.
Gupta, 65, reported to FMC Devens, a medical facility and
satellite camp in Ayer, Massachusetts about 40 miles (64 km)
northwest of Boston, a spokesman for the Federal Bureau of
The former global managing director of the McKinsey & Co
consulting firm began his term as the 2nd U.S. Circuit Court of
Appeals separately rejected his claim that the fine and officer
ban imposed in a separate U.S. Securities and Exchange Commision
civil case was excessive.
A three-judge panel of that court concluded that U.S.
District Judge Jed Rakoff, who oversaw the criminal and civil
cases, acted within his discretion in imposing that punishment.
Seth Waxman, an attorney for Gupta, did not immediately
respond to a request for comment on the ruling. SEC spokesman
John Nester declined to make an immediate comment.
A jury convicted Gupta in June 2012 of passing confidential
information he learned from Goldman board meetings, including a
crucial investment from Warren Buffett, to Raj Rajaratnam, the
onetime billionaire founder of the Galleon Group hedge fund.
Gupta is appealing his conviction. U.S. Supreme Court
Justice Ruth Bader Ginsburg, who hears emergency appeals from
the 2nd Circuit, last week denied his request to stay free on
bail while he appeals.
Rajaratnam is serving an 11-year prison sentence, and is
also being housed at Devens. The Supreme Court on Monday refused
to hear his appeal of his conviction.
Rengan Rajaratnam, a former Galleon portfolio manager, went
on trial on Tuesday in New York on charges that he engaged in
insider trading with his older brother.
In his criminal case, Gupta was also ordered to make $6
million in restitution to Goldman and pay a $5 million fine.
Rakoff imposed the officer ban in the civil case despite
finding at the criminal sentencing that Gupta was unlikely to
commit future crimes.
Waxman had argued to the 2nd Circuit that Rakoff's positions
were inconsistent, but the appeals court said the standard in a
criminal context was different from that in a civil case.
The case is SEC v. Gupta, 2nd U.S. Circuit Court of Appeals,
(Reporting by Joseph Ax and Jonathan Stempel; Additional
reporting by Nate Raymond; Editing by Jonathan Oatis)