Thaindian News

New York, April 13 (IANS) Rajat Gupta, former Indian-American director of Goldman Sachs Group accused of giving inside information to hedge fund tycoon Raj Rajaratnam, has asked a federal judge hear his lawsuit against the Securities and Exchange Commission (SEC).

“Gupta is the only Galleon-related defendant faced with the denial of the right to a jury and important procedural protections available only in federal court,” Gupta’s lawyer, Gary Naftalis, said in papers filed in the court of US District Judge Jed Rakoff in New York.

Asking Rakoff to reject the US regulator’s bid to dismiss the case for lack of jurisdiction, he noted that at least two dozen Galleon hedge fund-related individuals or businesses have been sued by the SEC as part of the Galleon investigation which are all pending in federal court in New York.

“The commission took the unprecedented step of instituting an administrative proceeding for civil penalties alleging insider trading against a non-regulated person,” Naftalis said.

“The impact of this ‘first use’ is to single out Mr. Gupta as the only Galleon-related defendant being pursued by the commission administratively.”

The SEC, in an administrative proceeding filed March 1 in Washington, accuses Gupta of giving information to Galleon Group co-founder Rajaratnam about Berkshire Hathaway Inc’s $5 billion investment in Goldman Sachs.

On March 18, Gupta sued the SEC in federal court in Manhattan, denying the SEC’s allegations and seeking a jury trial.

Gupta also asked to block the agency from pursuing its administrative claims and said the SEC’s allegations occurred at least 1 1/2 years before regulators were allowed to bring such an action under the Dodd-Frank Act.

Meanwhile, Rakoff himself is reported to have expressed concern about new powers vested in the SEC under financial legislation passed in July last year.

“One concern I have about Dodd-Frank is that it puts more adjudication into the hands of the SEC and its administrative judges,” Rakoff said in response to a question after a lecture at the Fordham University School of Law Monday night.

At Rajaratnam’s insider trading trial in a Manhattan federal court, his lawyers Tuesday argued that he based his trades on Goldman Sachs, at the height of the 2008 financial crisis on research-not tips from Gupta, as the government alleges.

Defence lawyer, Michael Starr showed the jury a Sep 23, 2008 email from Cypress Group research firm in Washington, saying legislation on a government bailout of banks would pass in the coming days.

Rajaratnam, he argued based his trades on that and other research not tips from Gupta. Gupta has denied civil charges in the case and has not been criminally charged.