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Can Rajat Gupta Restore His Innocence and Reputation?

February 8, 2016

Fox Business
By Serena Elavia

The U.S. Court of Appeals in Manhattan has agreed to review the 2012 insider trading conviction of former three-time McKinsey & Co. Managing Director and Goldman Sachs (GS) board member Rajat Gupta.

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The consequences of overturning Gupta’s conviction could be monumental for the future of insider trading cases. “People tend to be very suspicious of Wall Street and insiders and this case has that front and center. By the nature of the defendant, there will be a lot of eyes on this case” says Lathrop Nelson, a partner in the white collar and government investigations unit at Montgomery McCracken.

However, if the Appeals Court rules in Gupta’s favor, Nelson says that this won’t necessarily be a death nail for insider trading cases particularly for those that can prove that tippers receive a tangible benefit. And if SCOTUS goes against the Appeals Court and concludes that prosecutors do not need to prove a tangible benefit in order to prosecute for insider trading, then the success of Newman and the potential overturning of Gupta’s case might be short lived.

According to Nelson though, Gupta has a good shot at winning his appeal especially after the Newman overruling and that the Supreme Court has agreed to hear an insider trading case involving trades that Bassam Salman made based on mergers between clients of Citigroup (NYSE:C), where his brother-in-law worked. Bassam’s lawyers have argued that his brother-in-law Maher Kara did not receive any tangible benefit in exchange for tips.

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