Many in the US Senate and Congress are suspected of insider trading – but enjoy legal immunity | Cartoonist Chuck Asay in 2012 | Click for image.
Rajat Gupta, 63, denied illegally leaking boardroom secrets to Raj Rajaratnam, a former hedge fund manager now serving 11 years in prison.defence lawyers told the jury that the use of phone records and FBI wiretaps only created the illusion of illegal business activities.
“That is a gambit that can bamboozle people into thinking something was proven when it wasn’t,” defence lawyer Gary Naftalis said.
The trial focused on a phone call made to Rajaratnam on 23 September 2008, minutes after Gupta had listened to a private conference call discussing a $5bn (£3.2bn) investment in Goldman Sachs by Warren Buffett’s company Berkshire Hathaway. The deal would be made public after stock markets closed that day.
According to phone records, Rajaratnam bought $40m in Goldman Sachs stock moments after the phone call, earning nearly $1m. (via BBC News – Ex-Goldman Sachs director Rajat Gupta guilty of fraud).
How come never wire-taps were allowed in insider trading cases? Why only against Rajarathnam and Rajat Gupta?
Was it a huge fraud? Even if the State case is true, the amount was in a few piffling millions – unlike the Boesky.
Ivan F. Boesky, once among the financial world’s most powerful speculators and now a symbol of Wall Street’s excesses, was sentenced yesterday to three years in prison for conspiring to file false stock trading records.
The three-year term is the third longest to have been imposed in a case related to insider trading. Mr. Boesky had faced a maximum penalty of five years in jail and a $250,000 fine.
A year ago, Mr. Boesky settled civil insider trading charges, paying a record $100 million. He had been charged with illegally earning more than $50 million by trading with inside information he bought from Dennis B. Levine, a former investment banker who pleaded guilty to criminal charges earlier and is now in prison. Mr. Boesky subsequently disclosed that he additionally earned more than $30 million by illegally trading with inside information sold to him for $700,000 by Martin A. Siegel, once one of Wall Street’s top corporate merger specialists. Mr. Siegel has pleaded guilty to criminal charges and is awaiting sentencing.
Last April, Mr. Boesky pleaded guilty to the single felony count, at that time one of the most important devel-opments in the widening Wall Street insider trading scandal. Mr. Boesky pleaded guilty to conspiring to file false documents in regard to a scheme in which he helped the corporate raider Victor Posner take over the Fischbach Corporation by buying stock in the company.
Mr. Boesky was unlikely to serve more than two years of his term, though. According to the standard guidelines that govern prison sentences. (via BOESKY SENTENCED TO 3 YEARS IN JAIL IN INSIDER SCANDAL – New York Times).
And if, you thought this was bad, look at what followed.
Michael Milken pleaded guilty to six felonies and agreed to put up $600 million, $200 million of that in fines, to settle the biggest fraud case in the history of the securities industry.
Mr. Milken’s public admission ends four years of obdurate denial of wrongdoing, virtually assures a prison term and opens the possibility of further fraud prosecutions.
The six felonies to which he pleaded guilty are serious yet technical securities violations and did not directly enrich him. His lawyer has even characterized them as an overzealous attempt to help friends.
The plea bargain allows theft to be cloaked as misguided loyalty.
The plea bargain reinforces another misconception. In his statement to the court, Mr. Milken explained that his ”business was in no way dependent on these practices. Nor did they comprise a fundamental part of our business.” That claim is, at best, a self-serving half-truth.
Opportunities to cheat clients, the Internal Revenue Service and regulators were numerous and lucrative. Drexel, for example, would lend money to investors who were buying stocks based on the predicted outcome of deals that Drexel itself was arranging. (via Michael Milken’s Guilt – New York Times).
Now these were cases that were ‘open’ secrets. Everyone knew these guys were brazenly flouting basic norms of professional etiquette – and should be disbarred from Wall Street.
Legally, any action against Boesky or Milliken was possible – short of a death sentence.
Did Rajat Gupta know that this how insider-trading cases ae settled? | A Carol Simpson cartoon from 2003 | Click for image.
After fraud and illegal earnings in hundreds-of-millions, they served a few years in jail – and resurrected Michael Milken, ‘it seems, has made the classic American transformation from despised villain to “controversial” figure.’
Two big ones.
SEC wanted Rajarathnam to squeal on and implicate his brother Renjit. He refused. Secondly, apparently, he never banged his head at the altar of the American Dream.
Ditto for Rajat Gupta.
Forbes, had one article that summed up the case very well.
That was evidence, that could put away Rajat Gupta for life.
Gary Naftalis, Rajat Gupta’s lawyer asked, “Where’s the beef?” referring to the government’s lack of evidence. Unlike other insider cases, Neftalis has a point.
While the circumstantial evidence against Gupta is strong, there was no concrete evidence, a recorded conversation, that put Gupta on the phone with Raj Rajaratnam passing inside information. Sure there was the call in 2008 that Gupta placed to Rajaratnam after a Goldman Sachs board meeting and minutes later Raj placed a large order for Goldman stock ahead of the announcement of Warren Buffett‘s $5 billion investment in the investment bank.
Granted, it does not look good, but is it enough to persuade a jury?
Galleon hedge fund trader, Rajaratnam was convicted last year of receiving insider information from various sources, some of whom were caught on FBI surveillance (tape) speaking directly with him about the confidential information. The government was actively taping many of Rajaratnam’s calls, so why don’t they have Gupta saying, “Here is some confidential information for you to trade on.”?
Who knows, but they do have other people on tape saying just that, and that person is not even on trial.
Goldman Sach’s David Loeb, who is still employed by the firm, was caught on phone calls tapped by the FBI passing inside information to Rajaratnam about Intel and Apple, both publicly traded stocks. Those tapes, Gupta’s lawyers argued, show that Rajaratnam had multiple sources of inside information, including others at Goldman besides Gupta.
However, U.S. District Judge Jed Rakoff sided with the prosecution that such evidence was hearsay and not directly a part of this case. The jury never heard the tape. Loeb has not been charged, but if I were him I would be sleeping with one eye open.
Another piece of information that the jury will not hear is that Rajat Gupta (63) could spend the remainder of his life in prison if he is found guilty. The jury must decide guilt or innocence, but they will have no idea that the penalty they could be giving Gupta because that is not allowed.
There is no real “DNA”, a wire tape, that proves Gupta passed inside information to Rajaratnam. It does not exist, but the circumstantial evidence is powerful …. but that does not mean Gupta is guilty.
Last weekend, we learned that Commerce Secretary John Bryson was involved in a traffic accident where he left the scene, proceeded to drive along further and ran into another vehicle. Immediately the press wondered if there were alcohol and drugs involved with Bryson’s accident(s).
The real story that Bryson had suffered a seizure leading to the accidents. How quick we judge.
If this jury convicts Gupta, it is because they believed he had a close relationship with Rajaratnam and not that they had irrefutable evidence. Is that worthy of a life sentence? We will see.
via Rajat Gupta Case – It’s All Circumstantial – Forbes.
In case of Anand Jon, it is amazing how a murder accused, Phil Spector, was Juror No.6, of the jury that found Anand Jon guilty. While the Phil Spector murder case went on for nearly a decade. Anand Jon’s case that started after Spector’s crime, has completed quite a few years in prison.
Phil Spector, the rock music impresario behind hits like “Da Doo Ron Ron,” and “You’ve Lost that Lovin’ Feeling,” was convicted Monday of murdering a struggling actress at his mansion in 2003 after a night of drinking.
Mr. Spector, 68, faces at least 18 years in prison. The jury, ending a five-month trial, reached its decision after 27 hours of deliberating This was the second murder trial in the case; the first ended in a hung jury in 2007. Mr. Spector has been out on bail for most of the last six years, but was immediately taken into custody after the verdict on Monday.
Lana Clarkson, who was 40, starred in a 1985 cult hit, “Barbarian Queen,” and had a bit part in “Fast Times at Ridgemont High” in 1982.
She was working as a hostess at the House of Blues on the Sunset Strip when Mr. Spector visited, struck up a conversation and took her out drinking.
They finished the night at his mansion, known as the Castle, but, when she spurned his advances and tried to leave, he shoved a gun in her mouth and pulled the trigger, prosecutors said.
The prosecutors argued that this fit a pattern of Mr. Spector’s drinking and threatening women with guns over decades. (via Phil Spector Found Guilty of Killing Actress – NYTimes.com).
Anand Jon never pulled a gun, to force wannabe-models to have sex. He got more than 50 years in prison. Phil Spector gets less than half.
Anand Jon was a Brown Indian – a segment of people who Uncle Sam wants to cow down and make subservient and submissive.
Unlike Rajat Gupta. Rajarathnam. Or Vikram Budhi.
These people may be guilty as hell – but they had a lot more grace and character under pressure.
Unlike many others, who hiding in their rat-holes.