Monday, July 11, 2011
Judge Rakoff ruled today that former Goldman director Rajat Gupta can sue the SEC for bringing an administrative proceeding against him instead of suing him in federal district court, as the agency has done with other individuals allegedly involved in Raj Rajaratnam's insider trading ring. Gupta asserts that he is being denied his right to a jury trial and other procedural protections available in court and seeks injunctive relief to move the case to federal court.
Judge Rakoff has previously faulted the SEC for lack of transparency in its settlement negotiations, and lannguage in the opinion (as quoted in the Wall St. Journal) suggests that is his concern here as well. He noted that this is an "unusual" case of different treatment for one defendant, with no explanation from the SEC as to why it is treating Gupta differently, so that Gupta can proceed with a claim under the Equal Protection Clause of the Constitution.