New York, Nov 17: A federal court here should impose a civil penalty of 15 million dollars on former McKinsey managing director Rajat Gupta who was last month sentenced to two years in prison for insider trading, said the United States Securities and Exchange Commission (SEC).
On Oct 24, US District Judge Jed Rakoff fined Gupta 5 million dollars and handed him the jail term for sharing boardroom secrets with disgraced Tamil-American hedge fund manager Raj Rajaratnam.
The SEC charged Gupta with abusing "his position of trust" by disclosing to Rajaratnam Goldman Sachs's 2nd quarter financial results in 2008, Proctor and Gamble's Jan 2009 earnings release and Berkshire Hathaway's Sept 2008 investment of 5 billion dollars in Goldman Sachs.
"The court should impose the maximum three-time civil penalty of 15,096,585 dollars to punish Gupta for his terrible breach of trust and his craven, criminal conduct and to deter others from engaging in such conduct in the future," the commission said.
The SEC asked the federal court to bar 63-year-old Gupta from serving as director of any publicly-traded company and also not allow him to associate with any broker, dealer or investment adviser in the future. The court should issue an order permanently enjoining Gupta from future violations of the federal securities laws, the commission said in its motion.
"Gupta's conduct was far more egregious than that of the vast majority of defendants convicted of insider trading and warrants maximum penalty under the law. He betrayed the enormous trust and confidence bestowed upon him in the most egregious manner possible," the SEC stressed.
Since Gupta had produced more than 400 letters of support from luminaries such as Microsoft founder Bill Gates and former United Nations secretary general Kofi Annan before his sentencing, the commission noted, "The danger of his access to material, non-public information still exists. Nothing currently prevents Gupta from using his continuing access to corporate insiders to solicit inside information and trade on it on his own behalf."
Gupta has already appealed against his conviction in the US Court of Appeals for the Second Circuit.
OneIndia News (with PTI inputs)