Even though he’s currently serving a two-year prison sentence for providing tips to notorious inside trader Raj Rajaratnam, Rajat Gupta recently got some good news.

On Friday, the 2nd Circuit rejected a Goldman Sachs Group Inc. shareholder’s suit arguing that Gupta, a former Goldman director, should be forced to repay Goldman for the profits that his tips helped Rajaratnam gain. Shareholder James Mercer argued that Gupta qualified as a “beneficial owner” of Goldman shares because he provided tips allowing Rajaratnam, a hedge fund manager at Galleon Group, to realize profits. He claimed Gupta could be held personally responsible to Goldman for Rajaratnam’s insider-trading crimes because Rajaratnam paid him for his tips, he had a $16 million stake in a Galleon fund and he had an opportunity to profit in Galleon because of his closeness to Rajaratnam.

The 2nd Circuit rejected all three of Mercer’s arguments. First, the court said Mercer had no proof that Gupta received payments for his insider tips. Second, the court said Gupta wasn’t a “controlling shareholder” and didn’t have “investment control” over the Galleon fund in which he held a stake, which would have made him liable. Finally, the court said “business dealings alone” aren’t enough to establish beneficial ownership.

The 2nd Circuit’s decision upholds a previous ruling by U.S. District Judge Jed Rakoff.

Read Thomson Reuters for more about the decision.

For more recent InsideCounsel coverage of the Gupta/Rajaratnam insider-trading scheme, read:

Raj Rajaratnam’s younger brother charged with insider trading

Rajat Gupta must repay Goldman Sachs $6.22 million in legal costs

Rajat Gupta seeks to overturn his insider trading conviction

Gupta didn’t profit from Rajaratnam tips, lawyer says