NEW YORK ( TheStreet) - After his conviction on four felonly counts of securities fraud, Rajat Gupta, the former head of consulting firm McKinsey & Co and board director at Goldman Sachs (GS - Get Report) and Procter & Gamble (PG - Get Report), has been sentenced to 24 months in prison and will pay a $5 million fine.
The sentence, given in a New York federal court by Judge Jed Rakoff comes in far less than the maximum jail time Gupta could have faced. The prosecution on the insider trading case sought a sentence of 10 years in prison. Gupta's defense team sought to minimize any jail time, if any, arguing that the former executive should serve probation and community service.
"With today's sentence, Rajat Gupta now must face the grave consequences of his crime - a term of imprisonment," Preet Bharara, Manhattan U.S. Attorney, said in a statement. "His conduct has forever tarnished a once-sterling reputation that took years to cultivate," Bharara added, of Gupta's conviction and sentence.
In June, Gupta was convicted on three counts of securities fraud regarding tips made about Goldman Sachs and one count of conspiracy in an insider trading scheme run by hedge fund manager Raj Rajaratnam. A jury also convicted Gupta on a another felony count and acquitted the former finance and consulting executive on two charges.The case centered on Gupta's leaking of insider stock information to convicted Galleon Group manager Rajaratnam regarding the earnings of Goldman Sachs in 2008, while he was a board member at the company. His tips also focused on a $5 billion financial crisis investment in Goldman that Warren Buffett-run Berkshire Hathaway (BRK.A - Get Report) made at the height of the 2008 financial crisis. In May 2011, Rajaratnam was convicted on all fourteen counts of insider trading set against him by federal prosecutors and was sentenced to 11 years in prison, the harshest ever for insider trading. Gupta was acquitted of securities fraud charges related to his alleged tip of Procter & Gamble board secrets. Rajaratnam and Gupta's convictions culminate a five-year inquest by the Securities and Exchange Commission that has so far led to scores of arrests and more than two dozen criminal convictions. After a nine year tenure running McKinsey, Gupta became a director at Goldman, Procter & Gamble and the parent of American Airlines as well as philanthropic organizations like the Bill and Melinda Gates Foundation. After his June conviction, Gupta is the highest profile executive to be caught up in the SEC's Galleon case. Hedge fund traders from SAC Capital Management and Diamondback Capital Management, among others, are currently in the process of being prosecuted or sentanced.