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Rajat Gupta sues SEC

Rajat Gupta sues SEC

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Published by Fortune

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Published by: Fortune on Mar 18, 2011
Copyright:Attribution Non-commercial

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03/18/2013

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Gary P. Naftalis
Michael S. ObermanAlan R. FriedmanDavid S. FrankelRobin M. WilcoxKRAMER LEVIN NAFTALIS & FRANKEL LLP
1177 Avenue of the Americas
New York, New York 10036
(212) 715-9100
Attorneys for Plaintiff Rajat K. Gupta
UNITED STATES DISTRICT COURTFOR THE SOUTHERN DISTRICT OF NEW YORK
x
RAJAT K. GUPTA,
: 11-cv-1900
Plaintiff,
COMPLAINT FOR DECLARATORY
v.
:
AND INJUNCTIVE RELIEF ANDDEMAND FOR JURY TRIAL
SECURITIES AND EXCHANGE COMMISSION,
Defendant.
x
Rajat K. Gupta, for his complaint against the Securities and ExchangeCommission (the "Commission"), alleges as follows:
Introduction
1.
Mr. Gupta brings this action for declaratory and injunctive relief toprevent the Commission from violating Mr. Gupta's statutory and due process rights, includingby applying retroactively the remedy provisions of the Dodd-Frank Wall Street Reform andConsumer Protection Act, Pub. Law 111-203, 124 Stat. 1376 ("Dodd-Frank"). Relying onDodd-Frank, the Commission seeks, among other things, civil penalties from Mr. Gupta in anadministrative proceeding rather than a federal court action—an approach that the Commissionhas not taken against any non-regulated person other than Mr. Gupta. In so doing, the
ICI-3 2821257.1
 
Commission is unfairly and unconstitutionally singling out Mr. Gupta. This is the first casewhere retroactive application of Dodd-Frank would deprive a defendant of his right to a jury trialand other procedural safeguards as well as his access to federal court. At the same time, theCommission has filed
all
of its Galleon-related cases against at least
27
other defendants in
this
Court.
2.
Mr. Gupta denies all allegations of wrongdoing and stands ready to mounta defense against each and every one of the Commission's charges. Yet under currentCommission rules, Mr. Gupta would be deprived of a jury trial, the right to use the discoveryprocedures of the federal court to shape his defense, and the protections of the Federal Rules ofEvidence which were crafted to bar unreliable evidence. These are not abstract rights; they arethe practical and critical consequences of the Commission's attempt to apply Dodd-Frankretroactively. The Commission has already deprived Mr. Gupta of protections owed to him,when the Staff of the Enforcement Division invited him to make a "Wells submission" settingout a defense without informing him (and thereby inviting him to address) the intended choice ofan administrative proceeding over a federal court action. There is, moreover, no public record ofthe Commission itself having given due consideration to the submission—the whole purpose of aWells 'submission. Mr. Gupta comes before the very Court the Commission seeks to avoid andrespectfully asks for judicial relief.
Jurisdiction and Venue
3.
his Court has subject matter jurisdiction over the action pursuant to 28
U.S.C. §§1331, 1337, 1346, 1361 and 2201, and 5 U.S.C. § 702. Venue is proper pursuant to 28U.S.C. §§ 1391(b) and (e).
-2-
KL3 2821257.1
 
Mr. Gupta's Background
4.
Mr. Guptawho currently resides in Connecticutwas born in Kolkata,
India in 1948, the son of a teacher at a Montessori school and a journalist and prominent freedomfighter. After obtaining a Bachelor of Technology degree in Mechanical Engineering from theIndian Institute of Technology, Delhi, and an M.B.A. from Harvard Business School, he joinedMcKinsey & Company, the premier global strategy consulting firm, in 1973, rising to become
the firm's Managing Director Worldwide in 1994. He led the firm for nine years, until 2003, and
then served as Senior Partner Worldwide from 2003 to 2007. Following his retirement fromMcKinsey and before the adverse publicity triggered by the Commission's filing, Mr. Guptaserved on several public company boards as an outside director. He is not a regulated personunder the federal securities laws. He has devoted approximately half of his time to a number ofsignificant public service commitments, with a particular focus on improving public health andwelfare (especially HIV and malaria), education and global trade and investment.
The Order's Allegations and the Commission's Avoidance of Federal Court
5.
On March 1, 2011, the Commission issued against Mr. Gupta its ORDER
INSTITUTING PUBLIC ADMINISTRATIVE AND CEASE-AND DESIST PROCEEDINGSPURSUANT TO SECTION 8A OF THE SECURITIES ACT OF 1933, SECTIONS 15(b) AND21C OF THE SECURITIES EXCHANGE ACT OF 1934, SECTION 203(f) OF THEINVESTMENT ADVISERS ACT OF 1940, AND SECTION 9(b) OF THE INVESTMENT
COMPANY ACT OF 1940 (the "order"). By this order, the Commission commenced an
administrative proceeding against Mr. Gupta before an Administrative Law Judge of theCommission seeking, among other relief, civil penalties.
-3-
12L3
2821257.1

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