Insider trading: US court to hear Rajat Gupta's plea to delay surrender

New York: A US court has agreed to hear next week a bid by India-born former Goldman Sachs Director Rajat Gupta to delay his surrender to federal prison and remain free on bail while he challenges his conviction on insider-trading charges. The Court of Appeals for the Second Circuit in New York said arguments on the motion filed by Gupta for a stay of his January 8 surrender date and for release on bail pending appeal would be heard on December 4.

Gupta, 63, was sentenced to two years in prison by US District Judge Jed Rakoff on insider trading charges and was scheduled to begin his prison term on January 8. Federal prosecutors have asked the appeals court to deny Gupta's request to delay his surrender date and to remain free on bail, saying the India-born Wall Street executive is a "flight risk" since he has strong personal and financial ties to his native country.

Rakoff had also denied Gupta's bid to remain free on bail pending appeal when he had sentenced the former McKinsey head last month but had said Gupta was not a risk of flight. Rakoff said he would recommend the federal prison in Otisville, New York for Gupta to the Federal Bureau of Prisons. Gupta was convicted in June of passing confidential boardroom information about Goldman Sachs to his friend and business associate Raj Rajaratnam.

He was sentenced to two years in prison on insider trading charges and was scheduled to begin his prison term on January 8.

Gupta was charged in October 2011 and has been free on a 10 million bail since then. Rajaratnam, whose bid to remain free on bail was denied, is currently serving an 11 year prison term on insider trading charges. In court papers, Gupta's lawyers have argued that their client should be granted bail pending appeal, saying the challenge to his conviction would raise several "substantial questions of law," including that the district court was wrong in allowing wiretaps of Rajaratnam to be played at Gupta's trial.

The defence team has also argued that Gupta's case was weakened by Rakoff's refusal to allow him to present evidence that there were other sources who gave Rajaratnam confidential information about Goldman Sachs. "The district court's serious evidentiary errors decisively tipped the scales in this case, and Gupta's appeal will likely result in reversal or a new trial," the lawyers said.

"The prosecution's theory in this case was that after a lifetime of good deeds and philanthropy and while at the pinnacle of his profession Gupta decided to throw everything away and - for no tangible benefit - tip hedge fund manager Raj Rajaratnam," they said. Prosecutors have said Gupta "poses a risk of flight" due to his "strong ties overseas, including assets, family, and close friends in India and elsewhere, his incentive to flee after sentencing, his substantial means and his demonstrated disrespect for the law and capacity for deceit."

They argued that Gupta has not identified a "substantial question of law or fact" that is likely to result in reversal or a new trial. "The evidentiary challenges advanced in his motion are plainly insufficient to warrant bail," the prosecutors said in their court papers.

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