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Goldman ex-board member gets two years for insider trading

A New York court has sentenced former Goldman Sachs board member Rajat Gupta to two years in prison for insider trading. The conviction comes amid a crackdown on insider trading after the 2008 financial crisis.

US District Judge Jed Rakoff on Wednesday slapped Gupta with a two-year prison term and a $5 million (3.8 million euros) fine, citing his "extraordinary" humanitarian service as a reason to reject the prosecution's request for a tougher 10-year sentence.

The defense had asked for a community service punishment for Gupta, who had also previously headed McKinsey & Company and was director of Proctor & Gamble. But Rakoff said that senior executives who commit insider trading "must be made to understand that when you get caught, you will go to jail."

Gupta had been convicted in June of selling Goldman Sachs boardroom secrets to his friend Raj Rajaratnam, the former head of the hedge fund management firm Galleon, during the height of the 2008 financial crisis. Rajaratnam was sentenced last year to 11 years in prison for his role in the insider trading ring.

Some two dozen other defendants have been convicted for their role in the scheme. Prosecutors say some $75 million in illegal trades occurred over several years in the biggest insider trading case in history.

Tarnished reputation

Gupta was also a philanthropist who had been a leader in the fight against malaria in Africa.

"I've lost the reputation that I've built for a lifetime," he said. "I regret terribly the impact of this matter on my family, my friends and the institutions that are dear to me."

The Federal Bureau of Investigation's (FBI) acting assistant director in charge, Mary Galligan, said Gupta's conviction served as warning to people who engaged in insider trading.

"He broke the law," Galligan said. "That is what he has to answer for today. The sentence imposed should send a clear message: providing a tip to a friend, when the tip is insider information, has consequences."

slk/ipj (AFP, AP)