Corporate blueblood Rajat Gupta was sentenced to an unexpectedly lenient two years in prison for inside trading Wednesday by a federal judge who said his leaking of secrets he learned as a Goldman Sachs director was outweighed by his "exemplary" life.
Prosecutors wanted Gupta, 63, of Westport, Conn., to get eight to 10 years to send a message that would deter insider trading, but U.S. District Judge Jed Rakoff praised his reputation for integrity and devotion to improving children's health in Africa that were cited in letters from luminaries such as Microsoft's Bill Gates and former UN Secretary-General Kofi Annan.
"The court can say without exaggeration that it has never encountered a defendant whose prior history suggests such an extraordinary devotion not only to humanity writ large, but also to individual human beings in their times of need," Rakoff said.
Gupta, a largely self-made multimillionaire who was orphaned as a young man, was a former boss of the global consulting firm McKinsey & Co. and served on the board of directors of the Goldman Sachs investment bank and Procter & Gamble.
He was convicted in June of conspiracy and securities fraud for tipping off hedge fund billionaire Raj Rajaratnam, a friend in 2008, about an impending investment in Goldman from Warren Buffett, and later about an unanticipated earnings dip at Goldman. Rajaratnam was sentenced to 11 years in 2011 for multiple episodes of inside trading.
Gupta, dressed in a gray suit and light blue tie as he spoke in a courtroom packed with his wife, four daughters and other family and friends, continues to say he was innocent and did not apologize in his remarks to the judge. He did ask for "forgiveness" from those affected by his fall.
"I regret terribly the impact of this matter on my family, friends and institutions that are dear to me," he said. " . . . I feel terribly that they have been burdened with undeserved negative attention."
Gupta's lawyers argued that his "fall from grace" was punishment enough, urging the judge to order community service -- such as working on public health issues in Rwanda. But the judge brushed that suggestion aside as a "Peace Corps for inside traders."
Prosecutors said Gupta's high position of trust made his crime especially serious. But the judge cited mitigating factors -- Gupta personally made almost no money off the tips to Rajaratnam -- and said the two tips occurred at a psychologically difficult time in Gupta's life but weren't part of a pattern.
He also said a light sentence would deter defendants like Gupta, noting that "most business executives fear even a modest prison term to a degree that more hardened types might not."
Gupta did not visibly react when the sentence was announced.