Does the SEC have a chance against Rajat Gupta in federal court? We may be close to finding out what the SEC really thinks.

Recall that the SEC filed a civil administrative action against former Goldman Sachs director Gupta, charging that he provided material inside tips about the investment bank to Galleon Group founder Raj Rajaratnam, who later was found guilty by a jury of insider trading. Gupta then turned around and sued the SEC, saying it denied him a right to a trial by jury and other procedural controls that might have benefitted him.

U.S. District Judge Jed Rakoff has now ruled on the motion, saying Gupta indeed has a case. The judge said that there is in fact a record of Gupta being treated "Substantially disparately from 28 essentially identical defendants, with not even a hint from the SEC, even in their instant papers, as to why this should be so." The judge ordered that Gupta could pursue a case that argues his rights were violated under the Equal Protection Clause of the U.S. Constitution. Gupta's administrative case was to have started next week, but it has been delayed six months.

The ball is now in the SEC's court. The big mystery in all of this  was why the SEC chose to administrative route to begin with. The bar to convict is seen as lower in these cases, and that has led to the thought that maybe the SEC is less than supremely confident in its case again the big-name former McKinsey head. We'll see.

For more:
- here's an article from Reuters

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