If you are employed on Wall Street and happen to be dishonest, then you are probably pretty nervous right now after the quick-decision conviction of former Goldman Sachs director Rajat Gupta for insider trading.
By someone else’s count there are 120 cases of insider trading pending around the country, many in the jurisdiction of Manhattan US Attorney Preet Bharara, who prosecuted both Gupta and his pal, Raj Rajaratnam.
Rajaratnam was convicted of getting tips from Gupta. Raj made millions, while Rajat scored brownie points with his friend, who was the head of the Galleon hedge fund. Raj is serving his 11-year sentence in a federal prison in Massachusetts. Now, Rajat will also be imprisoned.
You can expect many of those 120 other defendants to now seek deals. The mood in America today is decidedly anti-Wall Street, and anyone foolish enough to take his case to trial will not only face huge legal fees but also juries that simply aren’t very sympathetic.
Gupta didn’t have a chance. Even if the handsome, sophisticated and rich 63-year-old former head of McKinsey & Co. had testified on his own behalf, jurors are no longer swayed by the argument that it was illogical for someone like Gupta to have cheated to make money he didn’t need.
Americans have experienced Wall Street greed firsthand and none of the financial crimes we’ve seen over the past many years are very logical.
Gupta faces a possible 25 years in prison. In all likelihood, Judge Jed Rakoff, who defended inside traders when he was a lawyer, will sentence Gupta to less than the maximum. Rakoff, according to a former prosecutor I know, is known for giving sentences below the federal guidelines.
Even so, Gupta will likely be imprisoned right after he is sentenced, even if he decides to appeal. That could be the end of it, except that Gupta has one card he could play.
As a director of Goldman, Gupta was a fly on the boardroom wall at a time of chaos in the financial markets. He could easily snitch about what that company was up to and win himself a handsome reward — part of his life back.
It’s possible that Goldman did nothing wrong, in which case the card Gupta is holding is really a joker. But federal investigators are actively looking into Goldman’s actions during the 2007 and 2008 financial crisis. And until that investigation is complete, Gupta’s card is aces.
Gupta had better hope he can barter information that investigators consider valuable for precious time off his sentence.
Gupta could soon be the one deciding who is next.
Goldman Sachs director Rajat Gupta, Raj Rajaratnam.Rajaratnam, Manhattan US Attorney Preet Bharara, insider trading, Wall Street, federal prison