Gupta Insider Case Built on Circumstantial Proof Poses Challenge to U.S.

The insider-trading prosecution of former Goldman Sachs director Rajat Gupta is built on circumstantial evidence that may be less persuasive than the wiretaps that sealed the fate of his friend Raj Rajaratnam, Bloomberg reports

Unlike the case against the Galleon Group LLC co-founder and hedge fund tycoon, which included his own words in calls with leakers, prosecutors will seek to convict Gupta based on the timing of his phone calls and the Rajaratnam trades that immediately followed, said Peter Henning, a law professor at Wayne State University in Detroit. Wiretaps likely to be used at Gupta’s trial involve Rajaratnam boasting of a source he doesn’t name. The government said that source is Gupta.

Prosecutors “don’t have the wiretaps, the smoking gun evidence,” Henning said in an interview following Gupta’s surrender to the FBI yesterday in Manhattan. “I wouldn’t call it a weak case, but there are some challenges that weren’t featured in the Rajaratnam case.”

http://www.bloomberg.com/news/2011-10-27/gupta-insider-case-built-on-circumstantial-proof-poses-challenge-to-u-s-.html