Former Goldman Sachs board member Rajat Gupta
has sued US regulator SEC for "unfairly and unconstitutionally" prosecuting him on charges of passing insider tips to Sri Lankan born-billionaire Raj Rajaratnam
Indian American Gupta, who was on the board of Proctor and Gamble, faces civil charges from the Securities and Exchange Commission, for passing confidential information to Galleon Group founder Rajaratnam, the main accused in the biggest insider trading case to hit US courts in decades.
"He (Gupta) has devoted his professional life to guarding and maintaining the most sensitive confidential and proprietary information of his clients, which included many of the largest multinational corporations and government institutions in the world," the new complaint said.
"There is no plausible reason why Mr Gupta would have deviated from a lifetime of probity and a career dedicated to safeguarding corporate confidences in favour of engaging in the significant and aberrational wrongdoing alleged," it added.
Gupta objects to being tried before a SEC administrative judge instead of federal court where he can get a jury trial.
"The Commission is treating Mr Gupta differently from all other non regulated persons from whom it has sought civil penalties for alleged insider trading by depriving Mr Gupta of the most fundamental rights for defending against insider trading charges," the complaint said.
Prosecutors played a secretly recorded phone conversation between Gupta and Rajaratnam during proceedings for the main accused.
In a July 25, 2008 phone call, Gupta can be heard telling Rajaratnam that Goldman Sachs is discussing buying Wachovia or American International Group (AIG).
"And there's a rumour, that Goldman might look to buy a commercial bank," Rajaratnam said in the conversation.
"This was a big discussion at a board meeting... It was a divided discussion in that board," Gupta purportedly said.
The main question of this insider trading case is whether Rajaratnam, 53, made US $45 million by using leaked confidential information.
His lawyers say that Rajaratnam conducted his business based on information that was already in the public domain and through research.