Gupta's lawyer Seth Waxman argued his case during a hearing before a three-judge panel of the 2nd US Circuit Court of Appeals here yesterday.

Gupta, 65, was not present for the hearing, during which Waxman argued that his client personally did not make any money from the trades done by Galleon hedge fund founder Raj Rajratnam and ‘nor had any expectation of making any money’.

Waxman said that Gupta should not be permanently barred from serving as a director on a board of a public company or taking up the role of investment advisor.

The appeals court judge asked Securities and Exchange Commission's lawyer David Lisitza that does not the civil penalty of nearly USD 14 million "seem high" since Gupta already has to pay USD five million fine in the criminal case and USD 6.2 million as restitution to Goldman Sachs.

The judge said Gupta was ‘convicted for two trades’ on which Rajaratnam made money. He asked if it is ‘reasonable’ for Gupta to pay USD 24 million in total out of his alleged net worth of more than USD 80 million in 2008.

Lisitza said if not Gupta then who should pay the fine since Gupta breached the trust of his company and board when he disclosed Goldman's confidential information to Rajaratnam.

"This is the insider trading case of our century so far," he said, describing it ‘unprecedented’.

When asked by the judge if there has been a similar case in the past where a defendant has to pay heavy civil penalties in addition to substantial criminal fines, Lisitza said Rajaratnam has been ordered to pay a huge penalty of over USD 90 million and is already serving 11 years in prison.

The judge, however, said that Rajaratnam was involved in a much broader scheme and many more trades than Gupta, who was convicted of two trades. The judges reserved their decision.

Gupta's lawyers have said he did not accrue any ‘direct financial benefit’ from the insider trading offenses and yet he has been ordered to pay a ‘heavy price’ of two years in prison, a USD five million fine and a separate USD six million in restitution to Goldman Sachs.

In addition to the USD 13.9 million civil penalties, the district court issued three permanent injunctions which effectively prohibit Gupta from ever serving as an officer or director on a board of a public company or accepting employment that involves associating with brokers, dealers or investment advisors.

Gupta will pay more than USD 25 million in fines, restitution, and penalties as a result of the criminal and civil proceedings against him.

(Agencies)

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