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Convictions pile up on Wall Street

SAN FRANCISCO (MarketWatch) – Rajat Gupta is a nice guy. That's what a string of character witnesses told the U.S. District Court jury in New York where he was being tried for insider trading.

They offered hard evidence of his goodness, citing generous charitable contributions and ardent fundraising to help the world's needy.

But he's also a criminal. That was the verdict reached Friday by a jury of eight women and four men, who said he was guilty of conspiracy and securities fraud.

Whether Gupta was convicted by a jury of his peers depends on how you define "peers." As the former head of McKinsey & Co., one of the business world's most respected consulting firms, and as a former board member at Goldman Sachs (GS) and Procter & Gamble (PG) , Gupta moved in circles that exclude most Americans.

But most Americans understand power and its abuse. And while the trial revolved around tedious evidence and arcane legalese, they obviously heard enough to convict Gupta of using information not available to the public to make money on publicly traded stock. That's an abuse of trust, an abuse of power; it's unfair and it's illegal.

Gupta has to wait until October to hear his sentence. That might seem a long way off, but what's a few more months when we're talking about crimes committed in 2008?

It's taken government prosecutors years to gather the evidence, itself a tedious process, and bundle it in a way that would successfully make the case that Wall Street insiders are, as Main Street investors have long suspected, not always playing by the rules.

But maybe it was worth the wait.

The government's conviction rate in this latest war on white-collar crime is impressive. Nearly 70 executives have been accused of insider trading. So far, 60 have copped plea bargains and/or face prison time.

That's not going to restore the millions of dollars pocketed by Wall Street crooks at public expense or undo their extensive damage to the economy, but watching them marched off to the Big House one by one takes some of the sting out of investment losses suffered in so many of the nation's little houses these past few years.

Will it deter future insider trading scandals? Probably not. The rewards remain too great and the temptations too strong, even for some of the nicest guys on Wall Street. But maybe they'll think twice before picking up the phone with a hot stock tip for their hedge fund BFFs.

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