US watchdog wants Rajat Gupta to pay $13.9 million fine, face life ban

New York: US regulator SEC has asked an  appeals court to affirm a district court's decision that  India-born former Goldman Sachs director Rajat Gupta pay a $13.9 million penalty and be banned for life from serving as  director of a public corporation.  

65-year-old Gupta has been granted time till April 7 to  file his reply to the SEC brief.  Gupta had last year in November asked the appeals court  to overturn the district court's decision that ordered him to  pay the $13.9 million penalty in the civil insider trading  case filed against him by the SEC.

His lawyers had argued that the district court “abused”  its discretion in imposing the statutory maximum civil penalty  of  $13.9 million, which is three times the $4.6 million  in gains made by hedge-fund manager Raj Rajaratnam who traded  on tips Gupta allegedly passed on to him.  The lawyers said the penalty was excessive in light of  Gupta already facing a five million dollar fine and two year  prison sentence in the criminal insider trading case. 

He has been convicted in a parallel criminal insider  trading case brought against him by federal  prosecutor Preet Bharara. He was sentenced to two years in  prison but has appealed against his conviction and is awaiting  the decision of the appeals court while on bail.  The district court found that, even over a year after his  conviction on multiple counts of insider trading, Gupta failed  to recognise that his conduct was “improper”. 

Gupta's repeated argument that he himself made no money  from any of the trades is "inconsequential" since his  misconduct "created substantial losses or the risk of  substantial losses to other persons," even if he did not  pocket any direct gains.