Rajaratnam and Gupta rely on recent opinion to challenge insider trading penalties

Citing a recent U.S. court decision which narrows the definition of insider trading, Galleon Group hedge fund founder Raj Rajaratnam and former Goldman SachsGroup Inc director Rajat Gupta are seeking to overturn penalties imposed against them for insider trading. .

Rajaratnam, is trying to void a $92.8 million penalty in a U.S. Securities and Exchange Commission civil case and Gupta wants to throw out his criminal conviction. In arguing for lesser punishments, both men cited a Dec. 10 ruling by the 2nd U.S. Circuit Court of Appeals in New York that overturned two insider trading convictions, which said insider trading required knowledge that insiders who passed confidential tips did so in exchange for personal benefits “of some consequence.”

Rajaratnam, 57, was convicted of fraud and conspiracy over a variety of trades that prosecutors said generated $63.8 million of illegal profit. Gupta, 66, , was convicted of passing tips to Rajaratnam about Goldman’s financial results and an investment from Warren Buffett’s Berkshire Hathaway Inc.

The case is being watched closely. Recently during arguments before the United States Supreme Court justices commented that insider trading cases may not meet legal standards.

Jeffrey Newman represents whistleblowers.