Gupta Attorney Says Government Can Expect Round Two in Insider Trading Case (UPDATE)

Rajat Gupta may have been convicted this morning on four counts of insider trading—three counts fraud, one count conspiracy—but don’t think for a moment that the former McKinsey & Co. chief executive will wait quietly for his Oct. 18 sentencing hearing. That was the message that Mr. Gupta’s lawyer, Gary P. Naftalis, delivered by e-mail this afternoon:

“We believe the facts of this case demonstrate that Mr. Gupta is innocent of all these charges, and that he has always acted with honesty and integrity. This is only Round One. We will be moving to set aside the verdict and will if necessary appeal the conviction.”

According to Mr. Naftalis, Mr. Gupta was acquitted on charges that he tipped Galleon Group hedge fund manager Raj Rajaratnam—currently serving an 11-year insider trading sentence of his own—to Procter & Gamble’s sale of its Folgers coffee unit to Smucker Co. (Mr. Gupta served on Procter & Gamble’s board of directors at the time.)

The government trumpeted its success in proving Mr. Gupta gave Galleon early word on two pieces of market-moving information involving Goldman Sachs, on whose board Mr. Gupta also served. According to prosecutors:

The evidence at trial proved that, on September 23, 2008, within approximately 60 seconds after the conclusion of a Goldman Sachs telephonic board meeting in which the Board approved a $5 billion investment by Berkshire Hathaway, GUPTA spoke with Rajaratnam. Immediately following the call, Rajaratnam directed two separate traders to purchase approximately $43 million of Goldman Sachs stock within minutes before the close of trading.

And:

on October 23, 2008, GUPTA participated on a Goldman Sachs Board posting call during which he learned that Goldman Sachs was losing money for the quarter, which Goldman Sachs had never done since becoming a public company. Just 23 seconds after that call ended, GUPTA called Rajaratnam. Following that call, at the first available opportunity after the stock market reopened, Rajaratnam started to sell his entire holdings in Goldman Sachs stock.

Update: Southern District spokeswoman Jerika Richardson said prosecutors had no comment in response to Mr. Naftalis’ statement.