Gupta’s $13.9 Million SEC Insider Trading Penalty Affirmed

On June 17th, the Second Circuit affirmed the imposition of a civil injunction and treble damages against Rajat Gupta for his provision of insider information to Raj Rajaratnam. The district court’s statements at the related sentencing concerning the improbability of future transgressions by Gupta must be read in the context of a criminal sentencing proceeding in which the court was considering possible grounds for leniency in sentencing, not the need to impose a civil injunction. The imposition of treble damages as a civil penalty, the statutory maximum, was appropriate despite the imposition of criminal penalties because of the egregiousness of Gupta’s conduct. SEC v. Gupta (summary order).

Supreme Court Sheds No Tears for Argentina.

On June 16th, the Supreme Court affirmed orders permitting discovery concerning Argentina’s assets. NML Capital, a judgment creditor of Argentina, subpoenaed third party banks seeking information about Argentina’s assets. The Court found that no provision of the Foreign Sovereign Immunities Act immunizes a foreign sovereign judgment debtor from discovery of its assets. Republic of Argentina v. NML Capital, Ltd. In a related development, the Supreme Court refused to hear Argentina’s petition for certiorari which sought review of orders requiring it to repay its bondholders on an equal basis. A district court had enjoined Argentina from making payments on debt issued in accordance with its restructurings without making comparable payments on its defaulted debt. The Second Circuit concluded that an equal treatment provision in the bonds barred Argentina from discriminating against the defaulted bonds in favor of bonds issued in connection with the restructurings. Second Circuit Opinion.