According to the court filing, the agreement between the two party was reached on Thursday.
The investigators have accused Gupta for providing insider-tips to convicted Raj Rajaratnam, the founder of Galleon Group hedge fund. The tips were given on the possible multimillion dollar investment from warren Buffet; and Procter & Gamble Co, where Gupta was also a director.
Although the prosecution had accused of Gupta being the co-conspirator but it did not charge him with criminally. It had only put him for administrative proceedings.
Gupta had accused that the regulator had deprived him of a jury trial and other procedure safeguards by bringing administrative proceedings rather than filing of a lawsuit.
Now, SEC has dismissed the administrative proceeding against him filed March 1 accusing Gupta of passing tips illegally to Rajaratnum.
"Dismissing these proceedings will not prevent the Commission from filing an action against Mr Gupta in United States District Court," the dismissal order shows.
The agreement between Gupta and SEC was declared to the public by US District Judge Jed Rakoff, who presided over Gupta's lawsuit.
Gary Naftalis, lawyer of Rajat Gupta said, "Mr Gupta is very pleased that as a result of his lawsuit the SEC has dismissed its administrative proceeding and he will no longer be singled out for disparate treatment."
"Mr. Gupta's lawsuit against the SEC has achieved all of the relief he sought. As we've said previously, the SEC's allegations are totally baseless," Naftalis further added.
John Nester, SEC spokesman, was quoted: "The staff is fully committed to the case and will proceed as appropriate."