Gupta's lawyer seeks new insider trial

Former Goldman Sachs director Rajat Gupta faces a

Former Goldman Sachs director Rajat Gupta faces a prison term. (Credit: Getty Spencer Platt)

A lawyer for a former board member at Goldman Sachs and Procter & Gamble Co. urged an appeals court panel Tuesday to give his client a new trial, saying a judge had excluded evidence that might have led a jury to acquit him on insider trading charges.

Attorney Seth Waxman told the 2nd U.S. Circuit Court of Appeals in Manhattan that Rajat Gupta never got a fair chance to prove his innocence because his daughter was not permitted to testify about how angry her father was at a billionaire hedge fund founder in 2008 when Gupta supposedly was feeding him inside information.

"That testimony would have powerfully refuted the government's theory of motive and timing," he said in support of Gupta, a former chief of the global consulting firm McKinsey & Co. and a director of Procter & Gamble.

Waxman said Gupta was mad at Raj Rajaratnam, founder of the Galleon Group hedge funds, because he had cheated him in a joint investment by withdrawing his $25 million without telling Gupta, who had invested $10 million. At the time, Gupta was one of the nation's most respected business executives.

At trial, prosecutors showed the jury phone records to prove Gupta called Rajaratnam immediately after Goldman Sachs board meetings to relay confidential information that allowed Rajaratnam to earn more than $11 million illegally.

Rajaratnam, convicted at a separate trial of insider trading charges, is serving an 11-year prison sentence after prosecutors said illegal trades made him up to $75 million. Gupta, convicted of securities fraud and conspiracy, was sentenced last year to two years in prison and was fined $5 million.

Judge Jon Newman, one of three appeals judges, seemed unimpressed with Waxman's arguments, questioning how a jury could "ignore all of that evidence" of insider trading.

"He gave him a tip because he was upset?" Newman asked. The judge also noted that evidence showed Gupta made his phone calls to Rajaratnam only seconds after getting off board conference calls.

"Are you telling us that's a coincidence?" the judge asked.

Waxman said Gupta had to return calls quickly because he had to get to another meeting minutes later.

The appeals court reserved decision.

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