Federal Court Rules for Kramer Levin Client Rajat Gupta in His Action Against the SEC

On July 11, 2011, the U.S. District Court for the Southern District of New York denied the SEC’s motion to dismiss the lawsuit brought against it by Kramer Levin client, Rajat Gupta. Mr. Gupta alleged that, in bringing charges against him administratively instead of in a federal action, the SEC was singling him out for disparate and prejudicial treatment, since the SEC had sued all 28 other Galleon Management-related defendants in federal court. Mr. Gupta claimed that this disparate treatment denied him equal protection of the law because in an administrative proceeding he would be deprived of important procedural rules and the right to a jury trial. The SEC argued that the district court lacked jurisdiction and that Mr. Gupta’s claim was barred by sovereign immunity. In a 22-page opinion, the court rejected each of the SEC’s arguments, finding that a district court action provided Mr. Gupta with the only meaningful forum for consideration of his constitutional claim.

Gary P. Naftalis, firm co-chair, argued the motion, assisted on the briefs by partners, Michael S. Oberman, Alan R. Friedman, David S. Frankel and Robin Wilcox, as well as Michael Sternhell, Ashley Miller and Michael Mellin.

The decision has been covered extensively, including by the New York Times and New York Law Journal.

Click here for the full opinion.