BENGALURU : FMC Devens correctional facility, Massachusetts, October 2014 Four concrete walls and a cold concrete floor. One small window but not enough light to read. A steel door with a grimy plastic window and a small slot in the center, locked shut. A narrow metal bunk with sharp edges, fixed to the wall, and a metal toilet with no seat or curtain for privacy. This was to be my home for the foreseeable future, which wasn’t really foreseeable at all. I had no idea how long they would keep me in the “special housing unit” or SHU—a prison euphemism for solitary confinement.
It was a shoelace, of all things, that landed me here. I bent down totie it, right as the Corrections Officer (CO) came by for the “stand-up count.” A few seconds earlier or later and I’d have been fine, standing to attention outside my bunk in the prison camp, as I did every morning at precisely ten, every afternoon at four, and every night at ten.
The rotating blue light on the ceiling flashed to alert us that the guard was about to begin his walk through the dormitory, counting each inmate. The rules specify you must be standing straight, and not move or speak during the count. While technically I wasn’t upright, there was no way that my improper stance had impeded his ability to count me.
But it didn’t really matter. If it hadn’t been this it would have been something else. As I’ve learned the hard way, if someone in a position of unchecked power wants to lock you up, they can come up with an excuse to do so. It doesn’t take much at all. A moment of carelessness. A misjudgment. Bad timing.
I was jailed on June 17, 2014, for the crime of securities fraud, generally known as insider trading. In my case, specifically, I had been charged with being part of a conspiracy to pass privileged “nonpublic” information about Goldman Sachs and Procter & Gamble (P&G), two organizations on whose boards I sat, to Galleon hedge fund manager Raj Rajaratnam, who then bought or sold stock in those companies and made a profit, based on his “inside” knowledge.
There was no such conspiracy. Although I did not know it at the time, Rajaratnam had indeed cultivated an extensive network of insiders, each of whom he compensated well for providing him with tips. But I was never one of them. I did no trading in either of those stocks, I received no payments, and made no money. Raj was a business colleague (a poor choice, on my part, but not a criminal one) and my calls to him during 2008 and 2009 were all made in that context.
To prove insider trading, as it is legally defined, the government needed to prove three things: one, that I passed nonpublic information to Rajaratnam; two, that I did so as part of an explicit quid pro quo agreement in which I knew he would trade on it; and, three, that I received some benefit in return. They had evidence of none of these—no wiretap recordings of information being passed, no emails, no money trail, and no direct witnesses. Rajaratnam himself was never formally charged with illegally trading either Goldman or P&G, although in 2011 he was charged with and found guilty of insider trading in numerous other stocks, including Google, Polycom, Hilton, and Intel.
The logic of charging me with these violations when they did not have evidence enough to charge the man who allegedly profited from them baffles me to this day. Moreover, no one could come up with a reasonable explanation for why I, a trusted advisor to countless corporations who had held sensitive insider information for decades, would suddenly decide to betray my fiduciary duties, and for no personal benefit. And yet I was found guilty, fined heavily, and sentenced by the judge to twenty-four-months’ imprisonment. The basis of my conviction was a handful of circumstantial interactions and hearsay statements that an overly zealous prosecutor spun into a conspiratorial narrative—one that was all too easy for a jury to believe in the wake of the financial crisis.
(Excerpted from Mind Without Fear by Rajat K Gupta, with permission from Juggernaut Books.)