So Rajat Gupta gets two years in the Federal penitentiary for gossiping about Goldman with a close associate.
Let me recount the ways in which this is a confused sentence.
If, as Judge Rakoff contends, what Gupta did was “disgusting” and a horrendous crime, then obviously two years is far too light a sentence. I mean, you can go to jail that long for a few traffic offenses or getting caught with some pot, neither of which any reasonable person would call depraved or “disgusting” behavior.
By giving Gupta only two years, Rakoff tacitly conceded that what Gupta did wasn’t really all that big a deal at all. He conceded that all the verbiage of outrage and offense was only so much moral puffery for the Occupy crowd, for whom a rich man is always guilty as charged.
And to be foreign and rich, now that really is a capital offense.
Let’s be honest.
What Bernie Madoff did was disgusting. What Job Corzine did, what Hank Paulson did, what Alan Stanford did – they were swindles and are disgusting.
What Gupta did (if he did do it) was something too trivial for this hooplah.
Except that it was an officer of a publicly-traded company who profited from the trading, you’ll say.
Except that he didn’t profit, I’ll reply.
And we don’t know if the guy even knew his good buddy Raj was trading on his words.
So, then, what we’re left with is a guy who said something to some other guy about something that was highly “confidential” but still being discussed at water-coolers round the country, a tip from which at least one Goldman board member, the very very waspy Byron Trott, later profited.
That sort of profiting, you’d think, would be insider-trading too, except, for some reason it isn’t. It never is when very very waspy people with monosyllabic Saxon names and Roman numerals behind them do it.
Everyone was talking about it. Other Goldman board members were talking among themselves about it. How secret could it have been?
At least one of those board members, and maybe two or three, were known to talk about Goldman affairs outside school.
So Gupta wasn’t alone in what he did.
And what he did isn’t even regarded as a crime by dozens of learned economists from Milton Friedman to Murray Rothbard.
Over here, I am not a learned economist, so I can think straight, and sure, gassing about confidential stuff when you have a fiduciary responsibility to keep your lips zipped, is clearly unethical, and an infraction deserving a penalty.
But it’s an infraction against the folks to whom you owe that responsibility.
That would be Goldman Sachs.
Whose middle name, I can confidently assert, is not fiduciary responsibility.
In fact, Goldman Sachs’ business model for some decades has been insider-trading.
That is roughly what the commodity and bond business is built on.
At notorious gold trading firm J. Aron, Lloyd Blankfein, Gupta’s principal nemesis on the witness stand, was not famous for either fiduciary responsibility or squeaky clean ethics.
Neither was Gary Cohn, his bosom buddy.
In fact, for Blankfein to finger Gupta on the stand, is like Ted Bundy giving testimony against Shelly the Shoplifter.
It would be hilarious, except that it’s not. It’s pathetic and, yes, disgusting.
If Gupta broke Goldman’s rules, Goldman should be hauling him over the coals. Since when is it the government’s job to police Goldman’s corporate culture?
As for the idea that Gupta somehow cheated Goldman public shareholders, that too is laughable. There is good evidence to show that insider trading actually profits non-insider buyers. And non-insider sellers are surely selling voluntarily, are they not? No one puts a gun to their heads to do it, right?
What’s more, there’s nothing to show that having insider information leads to a successful trade. Many’s the punter who’s lost his shirt over what he took to be a sure thing.
Besides all that, why should anyone give a rat’s ass about Goldman shareholders?
How super-ethical can any shareholder in Goldman Sachs be, in the first place? Here’s a company so dirty it’s a by-word in the markets, yet you have investors that want to hold directors to such high standards quite content to sink their money into this cess-pool.
Yeah. What a bunch of angels.
If Gupta really did do something that ripped off Goldman Sachs and its “little investors,” I for one would pin a gold medal on him.
The “little investors” knew that by buying Goldman they were subsidizing its graft and crime. But it didn’t matter, so long as they made money.
Why is that any less unethical than trading against Goldman?
In my book, it’s worse. Anyone who helped this firm, was profiting from its criminal actions and fueling them. Anyone who hurt it, was actually doing a public service.
I say, everyone who bought Goldman shares enabled its sleaze. And profited from its insider-trading. And Goldman’s insider trading was of a scale that makes Raj’s Galleon look like the good ship Lollypop.
If Gupta truly did do something that was horrendous – say, defraud a company – he deserved ten years.
Personally, I think he deserves at least five for ever working for an organization like Goldman Sachs. Directing Goldman or McKinsey is not the hall mark of a man of integrity in my book. Resigning from them would have been. But the morality of crony capitalism not what’s at issue here, is it? If it is, then Bill Gates, Larry Page, Mark Zuckerberg and several thousands of other CEOs should be joining Gupta in the pokey.
The two years Rajat Gupta got shows that the whole trial was a contemptible charade and the figure at the center of it only a scapegoat to appease a crowd slavering for blood.
Rajat Gupta was right not to grovel.
He should chalk this down as experience, and then put up a real fight:
1. Refuse to reimburse Goldman
2. Appeal Rakoff’s absurd rulings.
3. Get his rich friends to help him run the biggest investigation possible into Goldman Sachs and its cronies.
4. With his gold-plated Rolodex, he can sound out his government and corporate contacts to coordinate an investigation across the world. We have only seen the tip of the iceberg that is Government Sachs.
5. Finally, Gupta should counter-sue Sachs and its flunkies under international racketeering laws.
