## Facts

- Rajat K. Gupta, a former Goldman Sachs director, had access to material nonpublic information through his fiduciary role.
- Gupta provided hedge-fund manager Raj Rajaratnam confidential information, including Warren Buffett’s planned $5 billion Goldman Sachs investment and Goldman’s third-quarter 2008 losses.
- Rajaratnam and the Galleon funds traded on the tips, earning profits and avoiding losses.
- Gupta did not receive direct trading profits or other direct monetary gain from the transactions.
- A jury convicted Gupta of one count of conspiracy to commit securities fraud and three counts of securities fraud.
- The court issued a sentencing memorandum addressing the proper sentence under 18 U.S.C. § 3553(a) and explaining a variance from the advisory Sentencing Guidelines.

## Issues

1. Whether the advisory Guidelines range, driven largely by trading profits and avoided losses realized by others, overstated the seriousness of Gupta’s offense where he received no direct financial gain.
2. What sentence was “sufficient, but not greater than necessary” under 18 U.S.C. § 3553(a), considering breach of fiduciary trust, deterrence, and Gupta’s personal history and collateral consequences.

## Decision

- The court imposed a below-Guidelines sentence.
- The court sentenced Gupta to 24 months’ imprisonment, one year of supervised release, and a substantial fine.
- The court explained that the Guidelines’ heavy emphasis on loss amount produced a punishment greater than necessary for this defendant and conduct.

## Legal Principles

- The Sentencing Guidelines are advisory; a district court may vary when the Guidelines calculation conflicts with the purposes of sentencing in 18 U.S.C. § 3553(a).
- In insider-trading sentencing, the moral seriousness of the offense may rest primarily on breach of fiduciary trust and market harm, not solely on trading gains realized by others.
- Loss/profit-based enhancements may be given reduced weight where they are largely “resultant” and difficult to predict, particularly when the defendant did not personally obtain the gains.
- A custodial sentence may be warranted to reflect seriousness and provide general deterrence in white-collar offenses, even when personal enrichment is absent.
- A defendant’s history, charitable works, reputational harm, and other collateral consequences may be considered under § 3553(a) without excusing criminal conduct.

## Conclusion

The court concluded that a two-year prison term, supervised release, and a substantial fine appropriately punished Gupta’s insider-trading-related breach of fiduciary duty and served general deterrence, while avoiding an excessive, loss-driven Guidelines sentence that treated him as if he had personally reaped the trading profits.


United States v. Gupta, 904 F. Supp. 2d 349 (S.D.N.Y. 2012)