New York | Rajat Gupta, India-born former Managing Director of McKinsey, feels not testifying at his insider trading trial was a “bad call” and he regrets not taking the stand in his defence.
Gupta, 70, has penned his memoir Mind Without Fear’ that released Monday and tells of his dramatic rise to the top of the corporate and financial world in America and then his fall after being charged in 2012 in one of the largest insider trading cases in the US. He served a 19-month prison term and was released in 2016.
“I always believed that I should testify and I kept telling this to my lawyers. Till the very last weekend (of the trial) I was going to testify,” Gupta told PTI in an interview here.
The former director of Goldman Sachs said he had been telling his lawyers to prepare him to testify in court and he had been preparing himself for it. He, however, said that his lawyers advised him throughout the case that he should not take the stand in the courtroom.
“They kept saying don’t testify, don’t testify. It was a bad call on my part. I always regret it (not testifying in court),” he said adding that it was a very difficult circumstance for him since he did not know anything about the legal system. “Here were my lawyers, my advisers who are supposed to be in my interest. Right? They kept saying don’t testify,” he said.
Gupta said throughout his life as a consultant, he has given advice to his clients and they listened to him. “The situation was reversed. I was the client. So in the end I succumbed to their arguments. I felt it was a moment of weakness. I feel very badly about it that I didn’t testify,” he said.
In 2012, Gupta was found guilty of passing confidential boardroom information to then hedge fund founder Raj Rajaratnam, who is currently serving 11 years in prison for insider trading. One such information the prosecutors alleged Gupta shared with Rajaratnam in September 2008 was about Berkshire Hathaway’s five billion dollar investment in Goldman Sachs.
The prosecutors said Gupta participated in the Goldman Sachs board meeting via telephone and then 16 seconds after the Goldman call ended, he called Rajaratnam’s direct office line at the Galleon Group hedge fund.
Gupta maintains that he did not pass any inside information to Rajaratnam and said that it was routine for him to make phone calls when he got out of board meetings. “They (prosecutors) made a big thing about 16 seconds. I make calls after board meetings all the time, within 16 seconds. I get out of the board meeting, I make a call generally. I make call to my secretary saying who do I have to call, what do I have to attend to,” he said.
Gupta pointed out that Goldman chairman and chief executive Lloyd Blankfein had admitted during the trial he too used to make phone calls after getting out of board meetings. “The fact that I called him (Rajaratnam) after 16 seconds has no particular meaning. It’s just the normal procedure,” he said.
Gupta notes that “all I can remember” about the call was that he had been trying to contact Rajaratnam for information about his account related to the Voyager investment. During the trial, Gupta’s lawyers had presented evidence that Rajaratnam had cheated Gupta out of USD 10 million in the Voyager investment.
Gupta said he had called Rajaratnam on the morning of that September day and had spoken to him for several minutes because he needed some information about the Voyager account, which Rajaratnam was not giving to him.
He said he had been “exasperated” trying to get the Voyager information from Rajaratnam. Gupta’s bank needed the information and Rajaratnam said during the call that he would give Gupta the information later that day. “That I remember clearly,” he said.
“After the board meeting, I called my secretary. If I were to pass inside information to Raj, I would have called him directly. I didn’t. I called my secretary. I said ‘Did Raj send the information’. She said no. I said ‘Get me Raj’,” Gupta said, explaining the circumstances of his call to Rajaratnam after the Goldman board meeting.
He added that as his case began four years later, he didn’t even remember whether he was able to connect with Rajaratnam over phone that day. “I don’t know whether it was just his secretary or he was there or what. Because I don’t remember any conversation,” he said.
Gupta said had he testified at his trial, he would have definitely shared all the details with the jury. Gupta replied “of course” when asked if he feels he was wrongly convicted. “The fact that I appealed every step of the way should tell you that I am not an insider trader,” he said.
He pointed out that insider trading involves three things – there has to be evidence that one passed insider information, there has to be a quid pro quo and that the person giving inside information has to have a significant benefit. The prosecutors “demonstrated nothing of the second two. They had circumstantial evidence, just connecting the timing. But there is no real evidence,” he said.
In January this year, Gupta had suffered a setback when the Second Circuit Court of Appeals rejected his bid to throw out his 2012 insider-trading conviction, affirming a lower court’s ruling in the case. Gupta had been arguing that he served time in jail for conduct that is not criminal even though the government lacked evidence to show he “received even a penny” for passing confidential boardroom information to Rajaratnam.
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