Rajat Gupta, former head of McKinsey, was sentenced to two years in prison and a fine of $5 million on insider trading charges in the US. Of course, he did abuse his position by leaking sensitive company information to Hedge Fund Manager and friend Raja Ratnam, who made substantial gains from this information.
It's a strange paradox though, nobody has been able to pinpoint any financial gains made by Gupta from leaking stock sensitive information, which he was privy to. This perhaps is one reason why many prominent individuals, including his own advocates sought a less severe punishment for Gupta.
In fact, Gupta commanded tremendous respect even after the allegations of insider trading. Microsoft's Bill Gates and Kofi Annan former Secretary General of the United Nations were recently quoted in a section of the media who were among more than 200 friends of Gupta, to have written letters to US District Judge Jed Rakoff through his lawyers ahead of the Oct 24 sentence.
"I know most personally that the poor of the world have a profoundly capable and articulate advocate in Rajat Gupta," wrote Gates, who worked with Gupta when the latter served as chair of the Global Fund to Fight AIDS, Tuberculosis and Malaria.
Annan, who was UN Secretary General from 1997-2006 said Gupta worked on many projects with him. "I came to respect his judgment, and we became good friends." On one of the projects, management reform at the UN, Gupta was an adviser.
Yahoo news reported that Ajit Jain, a top Berkshire Hathaway executive and possible successor to Buffett, in his letter to the judge wrote that the impression of Gupta at his trial of someone who abused his position "for personal gain or aggrandizement" is "wholly inconsistent with the character of the man I know."
Prior to being convicted for insider trading, Gupta had an unblemished track record. In fact, his track record led many to believe that he would not receive a sentence of 8 to 10 years. Raj Ratnam was sentenced to 11 years in prison for using the leaked information by Rajat Gupta to earn an income made illegally through the tune of $75 million.
Drawing parallels, if Raj Ratnam was sentenced to 11 years for using information, then Rajat Gupta too should have received a similar sentence for sharing information.
Perhaps, his philanthropic work and lack of financial gains through insider trading may have helped his cause. It seems he gained nothing financially, but certainly lost his reputation and an impeccable track record.