Gupta pleads not guilty in insider trading, released on bail

New York, Oct 27: Rajat Gupta, who pleaded not guilty to charges of securities fraud and that he passed insider information to his billionaire friend Raj Rajaratnam while he was director at Goldman Sachs and Procter & Gamble, was released today on a USD 10 million bond.

The 62-year-old Indian American had entered his not guilty plea at his arraignment at a US District court here today. He was released on a USD 10 million bond, secured by his home in Connecticut.

Meanwhile, Gupta has made his appearance in US Magistrate Court in New York before Judge Kevin Fox. Following his presentment, he will be arraigned before US District Judge Jed Rakoff in the US District Court, Southern District of New York. Gupta, who surrendered earlier before the FBI, was indicted in a six count indictment on securities fraud. He is accused of sharing confidential information about investments at Goldman Sachs with hedge fund manager Raj Rajaratnam, the Sri Lanka born founder of Galleon Group.

He is charged with one count of conspiracy to commit securities fraud and five counts of securities fraud. He faces a maximum penalty of five years in prison on the conspiracy charge and 20 years in prison on each of the securities fraud charges.

Gupta, who appeared in court wearing a light blue shirt, has also been ordered to turn over his passport, with travel limited to the continental United States. A US Attorney's office official said Gupta has been "released by his own signature".

The court has set a trial date of Apr 9, 2012. Motions are expected to be filed in the case by January 3 and on January 5, the defence and prosecutors will discuss other administrative procedures in the case.

Gupta's lawyer Gary Naftalis had said earlier that his client was innocent. Gupta "did not trade in any securities, did not tip Rajaratnam so he could trade, and did not share in any profits as part of any quid pro quo," Naftalis said in a statement.

"Rajat Gupta was entrusted by some of the premier institutions of American business to sit inside their boardrooms, among their executives and directors, and receive their confidential information so that he could give advice and counsel for the benefit of their shareholders.

"As alleged, he broke that trust and instead became the illegal eyes and ears in the boardroom for his friend and business associate, Raj Rajaratnam, who reaped enormous profits from Gupta's breach of duty," Manhattan US Attorney Preet Bharara said. In addition, with respect to the conspiracy charge, Gupta faces a maximum fine of USD 250,000 or twice the gross gain or loss accrued from the crime.

For each of the securities fraud charges, Gupta faces a maximum fine of USD 5 million or twice the gross gain or loss derived from the crime.

PTI