Score one for Westport resident Rajat K. Gupta, the former Goldman Sachs and Procter & Gamble director accused by the Securities and Exchange Commission (SEC) of leaking confidential information about those companies.
Rajat Gupta: scores legal victory. File photo
The SEC Thursday dropped its administrative proceeding against the Greens Farms resident, handing him a victory in his legal battle with the agency. But it said it intends to pursue its case in federal court.
“The commission has determined that it is in the public interest to dismiss these proceedings,” the SEC said in a two-page order.
The SEC brought the administrative case against Gupta in March, (see WestportNow March 1, 2011) alleging that he provided insider tips about Goldman to Galleon Group founder Raj Rajaratnam at the height of the financial crisis in 2008. Rajaratnam was found guilty of criminal insider-trading charges in May.
No criminal charges were filed against Gupta, who responded to the SEC administrative action with a lawsuit, (see WestportNow March 18, 2011) contending that the SEC had unfairly singled him out.
Gary Naftalis, Gupta’s lawyer, reiterated that they believe the allegations are “totally baseless,” the Wall Street Journal reported.
The newspaper quoted a person familiar with the matter as saying the SEC took the unusual step of bringing an administrative case against Gupta, rather than the civil court procedures used for other Galleon-related SEC enforcement actions, because of concerns that a court action could jeopardize the criminal trial of Rajaratnam that started in March.
The SEC had alleged in its civil proceeding that that when he was a Goldman Sachs board member, Gupta tipped Rajaratnam on Goldman earnings and a $5 billion Berkshire Hathaway investment, as well as other material, non-public information about the bank, which Rajaratnam then allegedly traded on.
Gupta’s lawsuit alleged that the SEC’s administrative action would deny him his right to a jury trial and other procedural safeguards available if the case had been brought in a civil court.
