The US Securities and Exchange Commission has agreed to drop an administrative action against Rajat Gupta, former Indian American director of Goldman Sachs Group Inc. In return, he has agreed to withdraw a lawsuit claiming the regulatory proceeding violated his constitutional rights.
“Mr. Gupta is very pleased that as a result of his lawsuit the SEC has dismissed its administrative proceeding and he will no longer be singled out for disparate treatment,” Gary Naftalis, his lawyer, said in a statement. “Mr. Gupta’s lawsuit against the SEC has achieved all of the relief he sought.”
The SEC started an administrative proceeding in Washington March 1, claiming Gupta passed inside information to Galleon Group LLC co-founder Raj Rajaratnam about Goldman Sachs and Procter & Gamble Co. (PG), where Gupta was also on the board.
According to an agreement filed Thursday in federal court in Manhattan, the SEC will file any future complaint against Gupta in that court, where it would be heard by US District Judge Jed Rakoff.
“The staff is fully committed to the case and will proceed as appropriate,” John Nester, an SEC spokesman, said in an e- mail.
In the administrative proceeding, the SEC claimed Gupta gave Rajaratnam information about Berkshire Hathaway Inc.’s $5 billion investment in Goldman Sachs. The agency also alleges Gupta told Rajaratnam about quarterly earnings of Goldman Sachs and Procter & Gamble.
Gupta sued in the Manhattan court March 18, claiming the agency violated his rights by pursuing an administrative action rather than a lawsuit in federal court, where Gupta would have more procedural protections, including the right to have the case considered by a jury and the use of federal rules of evidence.