"Under those circumstances this might give him a defense that although he told Raj about the information, it was done so in trust and confidence and not to be used for trading," said Thomas Gorman, a partner at the Washington office of international law firm Dorsey & Whitney. "The two men do in fact have a long personal and business relationship which would support that claim.
"The government will argue that he … profited by enhancing his friendship and business relation with Raj, which is sufficient for an insider-trading claim."
Gupta surrendered Wednesday to the FBI in Manhattan at 5:15 a.m. Eastern time, a stunning fall from grace for a man who was once one of the most respected figures in corporate America. In addition to serving on the boards of Goldman and Procter & Gamble, he was a director of AMR Corp., parent of American Airlines.
Stuart Slotnick, a former prosecutor who now practices white-collar criminal defense, said the Gupta prosecution represents a widening of the crackdown on insider trading.