Reply #73: Ex-Goldman Director Sues S.E.C. Over Galleon Case

[Demeter]

http://dealbook.nytimes.com/2011/03/18/ex-goldman-director-sues-s-e-c-over-galleon-allegations/?ref=business

Rajat K. Gupta, a former director of Goldman Sachs and Procter & Gamble who has been accused by the Securities and Exchange Commission of leaking confidential information about those companies, on Friday sued the agency.

Mr. Gupta, 62, is accused of tipping Raj Rajaratnam, the Galleon Group hedge fund manager now on trial on securities fraud and conspiracy charges, about Goldman’s and P.&G.’s earnings, as well as information about Warren E. Buffett’s $5 billion in investment in Goldman, just minutes after the board approved it.

Gary Naftalis, a lawyer for Mr. Gupta, has called the S.E.C. accusations, which were filed on March 1, “totally baseless.”

Mr. Gupta’s complaint against the agency, filed in Federal District Court in Manhattan, contends that the S.E.C. violated his rights by bringing its case under the Dodd-Frank Act instead of suing in a court. Dodd-Frank allows the agency to pursue its case in a special administrative proceeding.

By doing so, the S.E.C. is trying to strip Mr. Gupta of the normal protections afforded to defendants in a civil lawsuit, the lawsuit says. Mr. Gupta’s lawyers also questioned whether the S.E.C. could apply the new rules more than two years after their client leaked information to Mr. Rajaratnam.

The lawsuit seeks a trial by jury and an injunction preventing the S.E.C. from pursuing its administrative proceeding against Mr. Gupta....