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Rajat Gupta Trial Begins
May 21, 2012
Rajat Gupta's trial on insider trading charges began in Manhattan federal court today with the selection of the jury -- a process completed by 2 p.m. The prosecution objected to the defense's use of staffers remotely reading a live transcript and researching prospective jurors, but Judge Jed S. Rakoff permitted the technique. Gupta's jury includes a nonprofit executive, a marketing manager, a psychiatric nurse, a grade-school teacher and a freelance beauty consultant.
Gupta is accused of funneling inside information on Goldman Sachs, of which he was a director, to Raj Rajaratnam for trading purposes. (Rajaratnam has been convicted and sentenced to 11 years in prison.) His lawyers' strategy may include depicting Goldman as "a cesspool of tipsters indiscriminately feeding inside information to Mr. Rajaratnam." Goldman itself has not been charged and its chief executive may be a government witness, but three Goldman executives are being criminally investigated.
A Forbes contributor argues that the prosecution will face greater challenges in Gupta's case than in Rajaratnam's: "none of the wiretaps in the government’s arsenal actually depict Gupta relaying illicit information." However, the Associated Press notes that Rajaratnam's jury heard a recording of Gupta confirming for Rajaratnam that Goldman's board had had a "big discussion" about acquiring an insurance company or a bank, and saw phone records reflecting a call by Gupta to Rajaratnam right after a board meeting.