Ex-Goldman, P&G board member from Connecticut seeks insider trading retrial in NYC

NEW YORK, N.Y. – A lawyer for a former board member at Goldman Sachs and Procter & Gamble Co. urged an appeals court panel Tuesday to give his client a new trial, saying a judge had excluded evidence that might have led a jury to acquit him on insider trading charges.

Attorney Seth Waxman told the 2nd U.S. Circuit Court of Appeals in Manhattan that Rajat Gupta never got a fair chance to prove his innocence because his daughter was not permitted to testify about how angry her father was at a billionaire hedge fund founder in 2008 when he supposedly was feeding him lucrative inside information.

“That testimony would have powerfully refuted the government’s theory of motive and timing,” he said in support of Gupta, a former chief of the global consulting firm McKinsey & Co. and a onetime director of the huge consumer products company Procter & Gamble.

Waxman said Gupta was mad at Raj Rajaratnam because the founder of the Galleon Group hedge funds had cheated him in a joint investment by withdrawing his $25 million investment without telling Gupta, who had invested $10 million. At the time, Gupta was one of the nation’s most respected business executives.

At trial, prosecutors showed the jury phone records to prove Gupta called Rajaratnam immediately after board meetings to relay confidential information that allowed Rajaratnam to earn more than $11 million illegally. Rajaratnam, convicted at a separate trial of insider trading charges, is serving an 11-year prison sentence after prosecutors said illegal trades made him up to $75 million illegally. Gupta, convicted of securities fraud and conspiracy, was sentenced last year to two years in prison and was fined $5 million.

Judge Jon Newman, one of three appeals judges, seemed unimpressed with Waxman’s arguments, questioning how a jury could “ignore all of that evidence” of insider trading.

“He gave him a tip because he was upset?” Newman asked. The judge also noted that evidence showed Gupta made his phone calls to Rajaratnam only seconds after getting off board conference calls.

“Are you telling us that’s a coincidence?” the judge asked.

But Waxman said Gupta had to return calls quickly because he had to get to another meeting minutes later.

He said Gupta telephoned Rajaratnam on one occasion by going through two secretaries, something he would not do if he was going to “throw away six decades of an otherwise praiseworthy life.”

Waxman added: “A lot of circumstantial evidence could have led a jury to acquit.”

Assistant U.S. Attorney Richard Tarlowe told the judges that Gupta’s 2012 trial was fair.

The actions by Gupta and Rajaratnam were “entirely consistent with a tip,” the prosecutor said. “It’s not a coincidence.”

He called some of Waxman’s argument “frankly baffling” in light of the government’s “overwhelming evidence.”

“We proved his guilt to a virtual certainty,” he said.

Gupta, a Harvard-educated businessman and Westport, Conn., resident, attended the appeals arguments. He declined to comment afterwards.

The appeals court reserved decision.