Former Goldman Sachs director Rajat Gupta failed in his attempt to stay out of prison while he appeals his 2012 conviction to the U.S. Supreme Court. On Friday, the 2nd US Circuit Court of Appeals in New York rejected Gupta’s move, and he will now have to start his two-year prison term beginning 17th June.
Gupta is also a former managing director of McKinsey & Company and the first managing director of foreign birth in McKinsey. He was also a board member of corporations like American Airlines and Procter & Gamble.
He is probably the most high-profile corporate official ever convicted for insider trading by the federal government’s attempts to thwart shady deals in the hedge fund industry. Gupta was found guilty by a federal jury for revealing inside information to his friend Raj Rajaratnam, who is currently serving an 11-year prison term while appealing his own conviction to the Supreme Court.
Evidence against Gupta included a phone call made by Rajaratnam in September 2008 immediately prior to Goldman announcing a $5 billion investment from Berkshire Hathaway. In that phone call, Rajaratnam is heard telling a trader that he had it from a source that something good might happen to Goldman. The prosecutors inferred the source was none other than Rajat Gupta, as only he was in a position to learn of and reveal such information to Rajaratnam.
Gupta was convicted on four criminal felony counts of securities fraud and conspiracy.
Earlier this year, in March the 2nd Circuit Court of Appeals had upheld Rajat Gupta’s conviction and he had agreed to serve his sentence by surrendering to federal prison authorities and beginning his term from June 17. Later, his defense changed stance and sought that he remain free on bail pending his appeal to the U.S. Supreme Court.