The civil insider trading charges lodged against former Goldman Sachs director Rajat Gupta are “baseless.”
So says Gary Naftalis, the ace trial lawyer who is representing Gupta.
Gupta is charged with tipping off his pal Raj Rajaratnam on Goldman’s (GS) dealings with Berkshire Hathaway (brka) and the firm’s 2008 earnings. The tips made Rajaratnam, who is facing criminal insider trading charges, a cool $17 million for just a few days of work, the Securities and Exchange Commission said Tuesday.
But Naftalis didn’t get to be one of the 100 top lawyers by being a pushover – he saved Michael Eisner’s bacon in the Ovitz case a few eons ago — and so it’s no surprise to hear his take on things differs a bit from the SEC’s.
Gupta, Naftalis says, isn’t just innocent — he is a paragon of virtue.
Two thoughts here:
One, it’s hard to hear accused rich guys protest about their integrity without thinking of Steve Rattner. The former private equity titan pledged last November to fight New York pension corruption charges to the bitter end — before, uh, agreeing a month later to apologize and cough up $10 million.
Two, Gupta’s hiding behind his Rajaratnam-related losses echoes Goldman’s own initial response to the SEC’s Abacus case, brought last April. The idea seems to be that no one would be silly enough to break the law without positioning himself to cash in.
This is a useful concept because it allows you to put your totally unrelated investing stupidity to work in your defense.
But poor investment performance won’t help Naftalis explain away all those phone calls between his client and Rajaratnam that just happened to fall between Goldman board meetings and Galleon’s well-timed purchases and sales of Goldman securities. So we shall see how compelling the SEC judge hearing the case finds talk of Gupta’s integrity.
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