[ by Melanie Gretchen ]

Former Goldman Sachs Director Rajat Gupta was ordered by the courts to reimburse the firm for millions in legal defense costs laid out by the firm.  Mr. Gupta, 64, who was convicted by a jury last May of having leaked boardroom secrets to hedge fund manager Raj Rajaratnam, was issued a 2-year prison sentence by Judge Jed Rakoff.  He has since been free on bail, and currently awaits the decision of a federal appeals court to his request to have his conviction overturned.

$6.2Mn Court Order.   Mr. Gupta's order to pay $6.2 million is less than the $6.9 million Goldman sought.  Those amounts pertain to the amount that Goldman paid to Sullivan & Cromwell, the firm's primary outside counsel, for an internal investigation and other legal expenses.  Judge Rakoff chose to cut the requested amount by 10% - based on some some extraneous entries within the law firm's 542 pages of billing records.

"On a few occasions the number of attorneys staffed on a task — while perhaps perfectly appropriate on the assumption that Goldman Sachs wished to spare no expense on a matter of great importance to it — exceeded what was reasonably necessary” under the statute." -- Judge Rakjoff, in his decision.

What this means is that the $6.2 million is in addition to Mr. Gupta's legal cost of defense, which to date reportedly has exceeded $30 million.  Mr. Gupta's deal with the firm before the his trial kept him covered by Goldman's bylaws requiring it to pay the legal fees of its top officers and directors – unless he was found guilty of insider trading, in which case he would reimburse the bank for the legal fees advanced him.  Because Mr. Gupta has appealed, Goldman must continue to pay, until his appeal is resolved.

For further details, go to [Dealbook, 2/25/13] and our Who's News story [Ex-Goldman Director Gupta Appeals For Reversal Of Insider Conviction].