US is no paragon of justice or fairness

Following the sentencing of Rajat Gupta, many commentators went to town about the fairness of the US system, which does not hesitate to bring the high and mighty to book. Rubbish, says Shankar Sharma in an interesting two-part article in BS. (part 1 and part 2).

Sharma contends that Gupta was nailed precisely because he was an outsider and interloper in a system that protects its own zealously. He lists other offenders who got away: Hank Paulson, former Goldman Sachs CEO and US Treasury Secretary; Hank Greenberg; Warrent Buffett; Steve Jobs.

Sharma contends that Paulson disclosed to a group of fund managers information that the government intended to place Freddie Mac and Fannie Mae under conservatorship, a move that would wipe out the firms' equity. The fund managers proceeded to short the firms' equity if they were not already holding short positions. Sharma writes:

If this is not giving out material, non-public information, then what is? If Rajat Gupta is guilty, why isn’t Paulson? If Gupta had given Raj Rajaratnam information that Goldman Sachs was going to get an investment from Warren Buffett (and suppose, if Rajaratnam had not sold an already long position in Goldman stock based on this material, non-public information), would this have amounted to a criminal offence on Gupta’s part?
Of the many things I don’t like about this Rajat Gupta affair, one is the Indian media’s sickeningly fawning portrayal of the American justice system as one that “doesn’t spare the rich and powerful, unlike ours where the well-connected get away”, and “how justice is dispensed speedily in the US”, and so on.
Nothing could be farther from the truth. The US protects its own rich and powerful better than we can ever do. Paulson got away clean. Not even an investigation. No investigation by the Securities and Exchange Commission into the trading by these attendee hedge funds. Nothing. Just a conspiracy of silence.

About Buffett, Sharma has this nugget:

Then, we have the strange case of David Sokol. He was Buffett’s No. 2, and was widely tipped to take over from the old man. Sokol bought shares of Lubrizol, prior to getting Buffett to buy the company outright. After the deal was done, Sokol told Buffett of this purchase. Buffett waved it aside, saying it was no problem. No problem? Sokol traded on inside knowledge of material, non-public information, and Buffett joined him in keeping this a secret.
When the problem came out, Sokol resigned, Buffett shrugged. And, that was it. The cover up had happened. Because any serious investigation would have led to Buffett himself becoming a party to any offence, since he chose not to report this to the authorities. Consideration for his old age? Well...