The insider-trading case against ex-McKinsey boss Rajat Gupta is now with the jury. From the beginning, this looked like a clear case of wrongdoing, but I believe there’s a good chance he’ll go free.
If the prosecutors fail to win a conviction, it will be because they failed to establish a convincing, easy-to-understand narrative about Gupta’s guilt. In the Martha Stewart case, for example, prosecutors had a simple story: Stewart lied to investigators. The jury heard that argument, weighed the evidence and found her guilty.
Prosecutors didn’
t establish an effective story line for Gupta.
The circumstantial nature of the evidence makes forming the narrative challenging, but a good prosecutor can do it. The case is based on phone records showing Gupta placed calls after confidential board meetings at Goldman Sachs and P&G to Raj Rajaratnam, who was convicted of insider trading earlier this year. Rajaratnam’s insider dealings were caught on tape recordings, but there were no tapes of conversations with Gupta.
The trial also bogged down amid procedural skirmishes and the tedious process of getting evidence into the record. That, too, prevented a clear narrative from taking shape.
Without a clear narrative, there might just be enough doubt about Gupta’s guilt in the minds of the jurors to win an acquittal.
I think the odds favor a conviction, but I’d put the odd of an acquittal (or mistrial) at about 20 percent. Anything can happen where a jury is concerned.
A good narrative – whether in a courtroom or elsewhere – makes all the difference when trying to win an argument.