MANHATTAN (CN) - Former Goldman Sachs board member Rajat Gupta claims the SEC violated his civil rights by suing him on inside trading charges in an administrative proceeding, "applying retroactively the remedy provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act," rather than in Federal Court.
Gupta claims the SEC did it to bar him from protections he would have in a jury trial, including discovery and rules of evidence.
Gupta, former managing director and senior partner for McKinsey & Co., faces civil charges from the SEC, which accused him of passing confidential information to Sri Lankan born-billionaire Raj Rajaratnam, who is on trial in Manhattan for insider trading.
The SEC filed the administrative action March 1, alleging Gupta gave information to Rajaratnam, founder of the Galleon Group hedge fund, about Berkshire Hathaway's $5 billion investment in Goldman Sachs, and about Goldman Sachs' quarterly earnings and the quarterly earnings of Procter & Gamble, where Gupta also served as a director.
In his federal complaint, Gupta says the Dodd-Frank became law on July 21, 2010, but he retired in 2007, and the violations of which he is accused allegedly occurred between June 2008 and June 2009.
"This is the first case where retroactive application of Dodd-Frank would deprive a defendant of his right to a jury trial and other procedural safeguards as well as his access to federal court," the complaint states.
"At the same time, the commission has filed all of its Galleon-related cases against at least 27 other defendants in this court.
"Mr. Gupta denies all allegations of wrongdoing and stands ready to mount a defense against each and every one of the commission's charges. Yet under current commission rules, Mr. Gupta would be deprived of a jury trial, the right to use the discovery procedures of the federal court to shape his defense, and the protections of the Federal Rules of Evidence which were crafted to bar unreliable evidence. "
Gupta claims he "has devoted his professional life to guarding and maintaining the most sensitive confidential and proprietary information of his clients, which included many of the largest multinational corporations and government institutions in the world. There is no plausible reason why Mr. Gupta would have deviated from a lifetime of probity and a career dedicated to safeguarding corporate confidences in favor of engaging in the significant and aberrational wrongdoing alleged in the order."
Gupta seeks declaratory and injunctive relief. He claims the retroactive application of Dodd-Frank would unconstitutionally deprive him of due process.
He is represented by Gary Naftalis with Kramer Levin Naftalis & Frankel.
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