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Gupta loses appeal of insider-trading conviction

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Gupta loses appeal of insider-trading conviction

Former Goldman Sachs director Rajat Gupta on Monday lost his bid to have the nation’s highest court review his 2012 conviction on insider-trading charges. The Supreme Court denied a legal submission by Gupta’s attorneys without comment. That left one of the highest-profile defendants convicted in a federal crackdown on insider trading to continue serving his two-year prison term.635651250314269245-AFP-539922774

Gupta, who’s also a former managing partner of business management advisory giant McKinsey & Co., was found guilty of illegally feeding non-public tips about Goldman Sachs to Raj Rajaratnam, the co-founder of the Galleon Group hedge fund. Rajaratnam is serving an 11-year prison term for his role at the center of a broad insider-trading scheme. Gupta argued on appeal that rulings by U.S. District Court Judge Jed Rakoff in New York improperly restricted defense evidence presented to jurors.

Defense lawyers had hoped to show that Gupta was unlikely to pass information to Rajaratnam because he believed the Sri Lankan hedge fund founder had cost him money in an unrelated investment. The defense team wanted jurors to hear detailed testimony about the issue from Gupta’s daughter, Geetanjali. Rakoff allowed Gupta’s daughter to testify about the investment, but ruled out potential testimony about Gupta’s purported anger at Rajaratnam.

Gupta’s defense team also tried to introduce evidence that someone else at Goldman Sachs might have passed the information to Rajaratnam. Rakoff, however, refused to admit the evidence on rounds of hearsay and lack of proper legal foundation. Additionally, Gupta’s lawyers argued that the trial judge erred by failing to instruct jurors that personal character testimony presented by the defense “may in and of itself raise a reasonable doubt” as to guilt. Rakoff declined to give the instruction, saying it would artificially single out one aspect of the case and by implication give it undue legal weight. The U.S. Court of Appeals for the Second Circuit rejected the defense arguments and upheld Gupta’s conviction in a March 2014 ruling that paved the way for his last-chance bid to have the Supreme Court review the case.

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