Former Goldman Sachs board member Rajat Gupta, the biggest target of a US government blitz on insider trading, was sentenced to two years in prison on Wednesday, far less than what prosecutors had demanded.
US District Judge Jed Rakoff in New York cited Gupta’s “extraordinary” contribution to humanitarian and educational causes during his climb to the pinnacle of the US business world as the reason for rejecting the 10 year sentence sought by prosecutors.
However, he also turned down a defense request for a lesser, community service punishment that attorneys suggested could have been carried out by helping the poor in Rwanda.
Photo: Reuters
Senior executives committing insider trading “must be made to understand that when you get caught, you will go to jail,” Rakoff said.
Gupta, 63, must also pay a US$5 million fine and was ordered to turn himself in on Jan. 8.
An Indian-born high-flier, whose wife, daughters and other members of his extended family sat behind him in the courtroom, was solemn, but showed no emotion as he heard his fate.
A few minutes earlier, he had told the court that the case was “the most challenging of my life since I lost my parents as a teenager.”
“I’ve lost the reputation that I’ve built for a lifetime,” he said.
“I regret terribly the impact of this matter on my family, my friends and the institutions that are dear to me,” he said.
Gupta was convicted in June of spilling boardroom secrets to his friend Raj Rajaratnam, the former Galleon hedge fund tycoon who was sentenced last year to 11 years in prison for his role at the center of an insider trading ring.
In addition to his spot on the Goldman Sachs board, Gupta had been head of the renowned consultancy McKinsey & Co, and a director of Procter & Gamble, making him one of the most successful Indian immigrants in the US.
Rakoff said that Gupta, a major philanthropist who has been a leader in fighting malaria in Africa and in helping disadvantaged youths, “deserves credit.”
The federal judge said that several jurors cried as they delivered their guilty verdict “because they recognized this was a person with some very good attributes.”
However, Gupta’s feeding of secret business information about Goldman Sachs to Rajaratnam at the height of the 2008 Wall Street financial crisis was “disgusting” and the “equivalent of stabbing Goldman in the back.”
The corrosive effect of insider trading, Rakoff said, “is to place in jeopardy the value of the marketplace, which is one of the most valuable assets the country possesses.”
At the FBI, Acting Assistant Director in Charge Mary Galligan said that Gupta’s disgrace was a warning to others.
“He broke the law. That is what he has to answer for today,” she said.
“The sentence imposed should send a clear message: Providing a tip to a friend, when the tip is insider information, has consequences,” she added.
WASHINGTON’S INCENTIVES: The CHIPS Act set aside US$39 billion in direct grants to persuade the world’s top semiconductor companies to make chips on US soil The US plans to award more than US$6 billion to Samsung Electronics Co, helping the chipmaker expand beyond a project in Texas it has already announced, people familiar with the matter said. The money from the 2022 CHIPS and Science Act would be one of several major awards that the US Department of Commerce is expected to announce in the coming weeks, including a grant of more than US$5 billion to Samsung’s rival, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), people familiar with the plans said. The people spoke on condition of anonymity in advance of the official announcements. The federal funding for
HIGH DEMAND: The firm has strong capabilities of providing key components including liquid cooling technology needed for AI servers, chairman Young Liu said Hon Hai Precision Industry Co (鴻海精密) yesterday revised its revenue outlook for this year to “significant” growth from a “neutral” view forecast five months ago, due to strong demand for artificial intelligence (AI) servers from cloud service providers. Hon Hai, a major assembler of iPhones that is also known as Foxconn, expects AI server revenues to soar more than 40 percent annually this year, chairman Young Liu (劉揚偉) told investors. The robust growth would uplift revenue contribution from AI servers to 40 percent of the company’s overall server revenue this year, from 30 percent last year, Liu said. In the three-year period
LONG HAUL: Largan Energy Materials’ TNO-based lithium-ion batteries are expected to charge in five minutes and last about 20 years, far surpassing conventional technology Largan Precision Co (大立光) has formed a joint venture with the Industrial Technology Research Institute (ITRI, 工研院) to produce fast-charging, long-life lithium-ion batteries for electric vehicles, mobile electronics and electric storage units, the camera lens supplier for Apple Inc’s iPhones said yesterday. Largan Energy Materials Co (萬溢能源材料), established in January, is developing high-energy, fast-charging, long-life lithium-ion batteries using titanium niobium oxide (TNO) anodes, it said. TNO-based batteries can be fully charged in five minutes and have a lifespan of 20 years, a major advantage over the two to four hours of charging time needed for conventional graphite-anode-based batteries, Largan said in a
Taiwan is one of the first countries to benefit from the artificial intelligence (AI) boom, but because that is largely down to a single company it also represents a risk, former Google Taiwan managing director Chien Lee-feng (簡立峰) said at an AI forum in Taipei yesterday. Speaking at the forum on how generative AI can generate possibilities for all walks of life, Chien said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) — currently among the world’s 10 most-valuable companies due to continued optimism about AI — ensures Taiwan is one of the economies to benefit most from AI. “This is because AI is