Rajat K. Gupta - former Goldman and P&G director, and alleged "co-conspirator" of Raj Rajaratnam - seemingly snatched victory from the claws of defeat.  The SEC dropped its administrative proceeding against Mr. Gupta "in the public interest ...".   Mr. Gupta reciprocated by dropping his lawsuit against the SEC.

“Mr. Gupta is very pleased that as a result of his lawsuit, the S.E.C. has dismissed its administrative proceeding and he will no longer be singled out for disparate treatment.  As we’ve said previously, the SEC’s allegations are totally baseless and cannot withstand scrutiny.”  -- Gary Naftalis, lawyer for Mr. Gupta.

The SEC made an unusual decision in March, filing a civil administrative proceeding against Mr. Gupta, accusing him of leaking secret board discussions to Raj Rajaratnam, the hedge fund billionaire, now convicted.  The proceeding would have been heard by an SEC administrative law judge in Washington.

But Mr. Gupta’s lawyers fired back with a lawsuit against the SEC, accusing the regulator of denying their client his right to a jury trial and treating him differently than the other Mr. Rajaratnam-related defendants, all of whom the SEC sued in federal court.

Federal Judge Jed Rakoff issued a ruling that allowed Mr. Gupta’s lawsuit to proceed, while criticizing the SEC for bringing the administrative proceeding instead of a federal lawsuit.  The SEC can still sue Mr. Gupta in federal court before Judge Rakoff.  Federal prosecutors, meanwhile, have not brought criminal charges against Mr. Gupta, but called him an unindicted co-conspirator of Mr. Rajaratnam.    [DealBook, 8/4/11]