Rajat Gupta did not get to be head of the firm McKinsey or earn a board seat at Goldman Sachs by letting opportunities pass him by. As wiretaps show, Gupta waited a mere 23 seconds to phone Galleon founder Raj Rajaratnam after Gupta heard about Goldman's impending financial woes. Gupta's ambition likewise knows no bounds. Other wiretaps show that just weeks before that phone call, Gupta planned on leaving Goldman's board for a more lucrative, $12 million gig to be a senior adviser at KKR.
“I think he wants to be in that circle,” Mr. Rajaratnam says. “That’s a billionaire circle, right? Goldman is like the hundreds of millions circle, right?”
So now that Rajaratnam has his own fancy-shmancy criminal trial for insider trading — ohhh, isn't he special, the biggest insider-trading trial in decades — Gupta is not going to be satisfied with just a mere administrative hearing with the SEC.
Gupta has filed a lawsuit accusing the SEC of unconstitutionally denying him a jury trial. Provisions in the Dodd-Frank financial reform bill enabled the SEC to try Gupta by administrative proceedings, rather than a civil
criminal trial like all the other defendants in the Galleon case — nineteen of whom have pleaded guilty. The SEC has yet to charge Gupta with any wrongdoing, although he has been named as a co-conspirator for passing Rajaratnam information about Goldman and Procter & Gamble, accusations he denies.
Gupta's lawyers allege that in administrative hearings, the SEC can use hearsay evidence. His legal team also takes issue with the fact that the SEC invited Gupta to discuss the main points of his defense without mentioning he might be up for administrative proceedings. Judges in administrative hearings don't have as much leeway to impose large fines. If Gupta is allowed a civil trial by jury and loses, the potential fallout could be greater. But Gupta knows the rules: Go big or go home. Oh yeah, and never be upstaged by a man that shares part of your first name.
Gupta Sues SEC Demanding Jury Trial [Fin Alternatives]