[ by Howard Haykin ] Rajat Gupta was found guilty by a jury in what seemed like a "New York Minute" - or at least a tad over one full day of deliberations.  Eleven jurors were convinced of his guilt from the get-go;  the 12th juror had doubts and he called upon the others discuss his concerns, which extended deliberations into the afternoon session of Day 2.  Very fast time for a case that featured 4 weeks of testimony, arguments, motions and objections, and a couple of dozing jurors. The 'What If' Takeaways. Matt Levine, a former Goldman employee who now writes for Dealbreaker, and is the author of the referenced story for this posting, argues that the "size of the pot" - much money Rajaratnam made on each tip from Gupta factored heavily on the jury's decision to accquit or convict on particular counts in the indictment.  The presumed logic follows:

What If ... Rajaratnam didn't make such substantial profits? Indications point to the possibility that the jury might have acquitted Gupta on some, or even all, of the counts of the indictment - especially in view of the fact that prosecution's evidence was largely circumstantial.

What If ... Rajaratnam wasn't so chatty, and didn't have such loose lips? It's quite likely then, that prosecution might not have had a 'smoking gun' for any of its charges.  In such an event, prosecution would have been holding a basketful of strong arguments for each of its indictments - though none would have been proven by prosecution "beyond a shadow of a doubt."   It's possible, if not likely, that the defense could have effectively snuffed out each and every charge or indictment - all the way to a complete acquittal.  It's possible, in which case Gupta would today be a free man.

But continue reading and see if you agree with the points raised by Matt Levine and myself.

How Many Indictments Ended in Conviction? In the end, a unanimous jury convicted Rajat Gupta all but 2 counts of the indictment.  The jury found him not guilty on counts #2 and #6, which let him off the how for work he did for Procter & Gamble.  Matt Levine was particularly surprised that the jury let Gupta off the hook on the accusation that he plugged Raj Rajaratnam into Goldman's 2007 audit committee conference call - particularly because they found him guilty on numerous other leaks of confidential material information, including the following:

• In September 2008, the meeting held to discuss Warren Buffett's $5 billion investment in Goldman - that tip generated $840,000 in illicit profits for Rajaratnam, prosecutors claim.
• In October 2008, the leaking of Goldman's disappointing Q3 results - this tip allowed Rajaratnam to avoid "several million dollars" in losses by selling 150,000 shares in October before those results were announced in December.  The actual numbers range between $3.6 and $3.8 million.

By comparison, Levine observes that the acquitted trades were smaller:  the March Board call seems to have made Rajaratnam about $700K (350,000 shares with a $2 one-day pop on the news);  Rajaratnam's shorts on p&G made him about $470K.  Levine's guesses the jury decided to throw Gupta a bone on a few counts, which may help to lighten the sentence he's to receive. Dealbook's Levine:  Main Thing for Sentencing Is How Much Money Was Involved. Nevertheless, the main thing that Dealbreaker's Matt Levine takes from theses transactions and are likely to factor in to his sentence, is how much money was involved.  For Raj, not for him.  There is a way in which this makes sense for certain financial crimes: for Allen Stanford and Bernie Madoff, each dollar that they made really was stolen from widows and orphans, and the bigger the theft the more harm they caused. For Raj Rajaratnam, the harm is more attenuated – nobody lost their life’s savings because they sold GS shares at market prices to him rather than to someone else – but there’s still some reason to correspond the size of profits with the size of a jail term, at least for deterrence purposes. Compliance-Insights' Howard Haykin.  Main Reason for Convicting was Timing of Calls and Rajaratnam's Chattiness. What stuck the jurors were the event following the 2008 board meeting regarding Buffett's investment.  Trial transcripts show that Gupta called Rajatnam as soon after the meeting as possible - i.e., 2/3 minutes after the board meeting ended, and minutes before 4:00 p.m. ET, when the markets' trading session would close as to close.  Within a couple of minutes after receiving the call from Gupta, Raj Rajaratnam barked out instructions to buy up large positions in Goldman shares, because by the next morning, the news would have reached every corner of the world.  Rajaratnam further made the statement that he had made the decision to buy Goldman shares based on information from the company's Boardroom.   The timing of the call and trades, with the tie-in to the Boardroom, was extremely damaging testimony for Gupta - even though it was still circumstantial evidence.  And, by the way, defense counsel tried very hard to have the telephone records and tape relating to this episode kept out of the trial - i.e., not admitted as evidence.  That didn't happen. "Having fallen from respected insider to convicted inside trader, Mr. Gupta has now exchanged the lofty board room for the prospect of a lowly jail cell." -- Preet Bharara, the United States attorney in Manhattan said in a statement. For further details, go to:   [Dealbreaker, 6/15/12].