Rajat Gupta is headed to prison.
Yesterday, U.S. District Judge Jed Rakoff sentenced the 63-year-old former Goldman Sachs Group Inc. board member and head of McKinsey & Co. to two years in prison for his insider trading crimes, which he called “disgusting” and “a terrible breach of trust.” Rakoff also ordered Gupta to pay a $5 million fine.
In June, a jury convicted Gupta of insider trading for passing confidential Goldman Sachs financial information to Galleon Group hedge fund co-founder Raj Rajaratnam, who was sentenced to 11 years in prison last October for insider trading. Gupta faced a maximum sentence of 25 years in prison.
Earlier this month, 400 of Gupta’s friends, family and some prominent philanthropists in the business world—including Microsoft Corp. Chairman Bill Gates and former United Nations Secretary General Kofi Annan—wrote letters to Rakoff beseeching him to be fair when he sentenced Gupta. They noted that Gupta has a reputation as a family man and a history of involvement in philanthropy, including involvement in the Global Fund to Fight AIDS, Tuberculosis and Malaria.
During the sentencing proceedings, Rakoff said Gupta’s crimes were “the functional equivalent of stabbing Goldman in the back.” Nonetheless, he said he had “never encountered a defendant whose past history suggests such an extraordinary devotion … to people in need.”
Gupta will begin his sentence on Jan. 8, 2013. Judge Rakoff denied Gupta’s lawyer’s bid to have him freed on bail pending an appeal.
For more InsideCounsel coverage of Gupta’s insider trading, read: