Former McKinsey & Company CEO and Goldman Sachs director Rajat Gupta, who was convicted of securities fraud related to an insider trading scheme in 2012, remains on track to be released from federal prison in March 2016. Despite his imminent release, Gupta has continued to try to get his conviction vacated under the Second Circuit's landmark Newman decision.

 

As discussed here in July 2015, Gupta's most recent motion to vacate his sentence was rejected by Judge Jed Rakoff of the SDNY, who ruled that the Newman decision does not apply to the facts in Gupta's case. Judge Rakoff found that the Newman case impacts "the liability of a remote tippee, whereas Gupta was convicted as a tipper." Even after Newman, Judge Rakoff found, a tipper is liable for securities fraud if he takes sensitive market information provided to him in a fiduciary capacity and exploits it for some personal benefit. 

 

Gupta appealed Judge Rakoff's July 2015 decision to the Second Circuit. On Tuesday, however, the Second Circuit dismissed Gupta's appeal. According to India's Tribune, the Second Circuit's dismissed the appeal on procedural grounds. Rajaratnam reportedly sought a “certificate of appealability” but the court denied this request, stating that "Appellant has not shown that 'jurists of reason would find it debatable whether the district court was correct in its procedural ruling' ...as to whether Appellant’s claim was procedurally defaulted."

 

According to the Federal Bureau of Prisons Inmate Locator, Gupta remains at FMC Devens, where he is scheduled to be released on March 13, 2016 (see screenshot below).  FMC Devens is "an administrative security federal medical center with an adjacent minimum security satellite camp" that also houses Raj Rajaratnam (the person to whom Gupta was convicted of conveying material non-public information). Rajaratnam is not scheduled to be released until July 4, 2021.

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