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Federal appeals court upholds insider trading conviction

The US Court of Appeals for the Second Circuit [official website] on Tuesday affirmed [opinion, PDF] the insider trading conviction of former Goldman Sachs [corporate website] director Rajat Gupta. Judge Amalya Kearse rejected Gupta's claim that wiretap evidence should not have been admitted against him. Gupta was convicted of three counts of securities fraud and one count of conspiracy to commit securities fraud in June 2012, primarily upon the basis of statements he made by phone to Raj Rajaratnam [JURIST news archive], head of the Galleon Group hedge fund firm, informing him of Goldman Sachs' investments and financial results. Judge Kearse found "ample" evidence in the statements to support Gupta's conviction. The district court sentenced Gupta to two years in prison, one year of supervised release and a (USD) $5 million fine.

The Second Circuit affirmed [JURIST report] the conviction of Gupta's co-conspirator Rajaratnam in June 2013, rejecting a similar claim that wiretap evidence should not have been admitted against him. Rajaratnam was convicted [JURIST report] by the US District Court for the Southern District of New York [official website] in May 2011 and sentenced [JURIST report] to fines totaling almost (USD) $64 million and 11 years in prison, the longest sentence ever handed down for insider trading. Goldman Sachs had previously faced controversy in July 2010 when they settled [JURIST report] for (USD) $550 million with the US Securities and Exchange Commission (SEC) [official website] for charges that they marketed a subprime mortgage product and made misleading statements and omissions to investors in early 2007.

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