Rajat Gupta to remain free on bail

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In what might be seen as disconcerting sign for federal prosecutors, a U.S. district judge in Manhattan has ruled that Rajat Gupta, the former Goldman Sachs director who was convicted of insider trading fraud, can remain free on bail while he appeals the verdict.

As noted by DealBook, Gupta was to report to prison on January 8 to begin serving a two-year sentence. The "ruling suggests that Mr. Gupta persuaded the judges that he has legitimate issues to argue on appeal. The same federal appeals court had denied a request by Mr. Rajaratnam to remain free on bail pending his appeal. Mr. Rajaratnam is serving an 11-year prison term. Mr. Gupta's lawyers are expected to make several arguments in pushing for his conviction to be overturned. The most significant issue on appeal is expected to be the government's use of the wiretaps during the trial. Judge Jed S. Rakoff, the trial-court judge, allowed the jury to hear incriminating wiretapped conversations involving Mr. Rajaratnam and his traders that suggested he had a source inside of Goldman."

The wiretaps did not include Gupta, only Rajaratnam talking to others. So some may consider the evidence quite circumstantial. It's an open question if the wiretap of Rajaratnam was decisive in the minds of the jury. In any case, prosecutors certainly do not want to retry the defendant without the tap. 

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