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Ex-Goldman director Gupta's insider trading conviction upheld

A federal appeals court on Tuesday rejected a bid by former Goldman Sachs director Rajat Gupta to overturn his insider trading conviction.

The 2nd U.S. Circuit Court of Appeals rejected the claim by Gupta, also a former global managing director of consulting firm McKinsey & Co, that wiretap evidence should not have been admitted against him.

Seth Waxman, a former U.S. solicitor general representing Gupta in his appeal, did not immediately respond to requests for comment. A spokeswoman for U.S. Attorney Preet Bharara in Manhattan declined to comment.

Rajat Gupta
Peter Foley | Bloomberg | Getty Images
Rajat Gupta

Gupta, 65, is the highest-ranking U.S. corporate official convicted of insider trading since the government announced a broad probe into that activity 4-1/2 years ago.

He had been appealing his June 2012 conviction and two-year prison term for having fed confidential tips from Goldman board meetings in the second half of 2008 to Raj Rajaratnam, a longtime friend and head of the Galleon Group hedge fund firm.

Photo: James Lauritz | Digital Vision | Getty Images

These tips included information on Goldman's financial results, as well as a crucial $5 billion investment during the financial crisis by Warren Buffett's Berkshire Hathaway.

In one such call, Rajaratnam was heard telling a trader that a caller had told him just before the Berkshire investment was announced that "something good might happen to Goldman."

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Prosecutors contended that Gupta made that call just after emerging from a Goldman board meeting to approve the investment.

In a 48-page decision, Circuit Judge Amalya Kearse wrote that there was "ample evidence" to support a finding that Gupta conspired to pass confidential tips about Goldman to Rajaratnam.

She also rejected Gupta's argument that he deserved a new trial because the trial judge, U.S. District Judge Jed Rakoff, improperly limited his ability to mount a defense.

Rajaratnam was also convicted of insider trading, in a case that also relied heavily on wiretap evidence. He is serving an 11-year prison term.

The case is U.S. v. Gupta, 2nd U.S. Circuit Court of Appeals, No. 12-4448.

By Reuters