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The judge said Gupta's full appeal could be argued in either April or May. Photo: Getty Images

A US federal appeals court has accepted a plea by Rajat Gupta, the former Indian-American director of Goldman Sachs Group, to remain free on a $10 million bond while he fights his insider-trading conviction.

US Circuit Judge Jose Cabranes accepted Gupta's plea after a hearing Tuesday in the US Court of Appeals in New York against a ruling by US District Judge Jed Rakoff in Manhattan that he surrender to prison Jan 8 and begin serving his two-year sentence.

After Cabranes announced his decision, Gupta's wife Anita burst into tears and his four daughters patted their father on the back.

Cabranes said the appeal would probably be accelerated and that Gupta's full appeal could be argued in either April or May.

Gupta, 64, was convicted by a jury in June of twice passing illegal information about Goldman Sachs to Galleon Group co-founder Raj Rajaratnam, once Sep 23, 2008, and again Oct 23, 2008.

Seth Waxman, a lawyer for Gupta, argued Rakoff wrongly allowed prosecutors to use three recordings of telephone calls of Rajaratnam talking about his sources, calls in which Gupta wasn't a participant.

Waxman also said that Rakoff erred when he ruled Gupta couldn't present testimony from his daughter that he told her Sep 20, 2008, that he'd discovered that Rajaratnam had withdrawn money from the fund. Gupta lost $10 million, Waxman said.

Assistant US Attorney Reed Brodsky, who prosecuted Gupta at trial, argued Rakoff hadn't erred in his rulings and hadn't abused his discretion when he rejected Gupta's request to remain free pending appeal.

Brodsky said the government had presented evidence during the trial that Gupta would benefit from any trades made by Rajaratnam in the Galleon International Fund.

He also said Rakoff had correctly permitted prosecutors to play a Federal Bureau of Investigation wiretapped Oct 4, 2008, call between Rajaratnam and David Lau, a Galleon trader in Asia.

During the call, Rajaratnam said, "I heard yesterday from someone who's on the board of Goldman Sachs that they're going to lose $2 a share, the market has them making $2.50."

"I'm going to whack it," said Rajaratnam, who is now serving an 11-year prison term for insider trading at the Federal Medical Centre Devens in Ayers, Massachusetts.

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