The timing of the SEC’s insider trading charges against former Goldman Sachs exec and McKinsey head, Rajat Gupta, apparently caused a massive fight between federal prosecutors and regulators, NetNet reports.
John Carney explains
that the SEC, which is prosecuting the insider trading case against Raj Rajaratnam, were eager to file a civil complaint against Gupta as soon as possible.
But the U.S Attorney’s office thought that charging him so close to the beginning of Raj’s trial, “might be viewed as prejudicial to the criminal case against Rajaratnam.”
So the prosecutors tried to pressure the SEC to delay filing the complaint until at least after the jury had been selected in the Rajaratnam trial, because they assumed that Raj’s defence would claim,
That the pre-trial publicity surrounding the filing of insider trading violations against a person as prominent as Gupta had tainted the jury pool. They feared that this would give Rajaratnam’s lawyers an excuse to try to have the case moved from federal courts in New York to another location—or perhaps have the case thrown out altogether, a person familiar with the matter said.
And apparently, the feud grew more and more rancorous with each day, and eventually got so bad that it reached the highest echelons of the Department of Justice and the regulator — Mary Shapiro became personally involved in the fight.
The SEC ended up charging Gupta on March 1, a week before jury selection for the trial.