For many people, prison is a terrible place that breaks their spirit and turns them into a shell of the person they once were. They grow bitter. They harden. Their looks take a hit. Two people for whom time in a correctional facility actually seems to have served them quite well? The currently incarcerated Raj Rajaratnam, who is said to be in quite “good spirits” and looking fantastic, to boot, and the recently released (early for good behavior) Danielle Chiesi, who looks GOOD and feels GREAT. Read more »
Insider-trading scams can be hard on a friendship. For instance, we doubt that Rajat Gupta has many warm feelings left for his old buddy Raj Rajaratnam. Nor, it seems, is he feeling particularly kindly towards he and Raj’s partner in private equity firm New Silk Road Partners.
Even facing two years in prison, the former McKinsey & Co. chief does not care to be screwed on a business deal. Which is what he says is happening, re: New Silk Road and his old buddy Parag Saxena. Read more »
Informant’s Assistance On Insider Trading Case Slightly Undone By Telling “Series” Of Lies To GovernmentBy Bess Levin
On the one hand, Roomey Khan’s assistance as a cooperating witness was “extremely substantial.” On the other, she seems to have told between 1 and 100 lies to government officials. Read more »
Back in December, things were not going so well for hedge fund manager Raj Rajaratnam. For starters, he had just reported to prison to serve an eleven year sentence for insider trading, where there would be no April Fool’s day midgets or employees to tase or extra mayo to eat. Then there was the matter of the “unique constellation of ailments ravaging his body,” and the kidney transplant he was said to need. Finally, and not that there’s anything wrong with this, but if you’re a person who thinks looks matter, he was quite fat. It would have been enough to send Raj into an understandable tailspin of sorrow and despair. And yet? It turns out the Galleon founder is not only doing great but looks good too. How good? While we have no photographic evidence, consider that an attorney not related to or paid by the guy, ostensibly speaking to Bloomberg about a story involving Raj declining to answer questions about a tax shelter case, could not help but steer the conversation to Big R’s new body. Read more »
So he’s off the hook for his work at P&G, with the lesson perhaps being that people will believe much more nefarious things about Goldman than they will about Procter & Gamble. More amazingly, the jury decided that he did not leak confidential information from the 2007 Goldman audit committee call that he seems to have conferenced Raj Rajaratnam into; perhaps they bought the defense that he was having an unrelated conversation with Rajaratnam during the entire duration of the Goldman call. Read more »
The less good news is that a jury found the former McKinsey executive guilty on three counts of securities fraud and one count of conspiracy for passing material non-public information to his friend*, convicted insider trader Raj Rajaratnam. The good news: Read more »
Over the course of the Rajat Gupta insider trading trial, attorneys for the former Goldman Sachs director have attempted to show that while their client was privy to material non-public information about, among others, Goldman and Procter & Gamble, and had an established relationship with Raj Rajaratnam, the hedge fund manager currently doing eleven years for trading on material non-public information, their client had no role in helping Raj-Raj score his ill-gotten gains. Last Monday the defense put a witness on the stand who told the jury that while once close, Gupta wasn’t even invited to Rajaratnam’s “lavish 50th birthday party that took place in Kenya,” ergo there is no way Rajat would’ve shared inside info with the guy. This week, the team was hoping to play wiretaps of conversations that took place between Rajaratnam and Goldman executive David Loeb, who they claim is the actual person who tipped off the Galleon manager. Unfortunately: Read more »
I’ve occasionally entertained myself in the last few weeks by building a fantasy-universe defense for Rajat Gupta in which he was a well-meaning but somewhat bumbling director trying to raise money for Goldman and socialize with his buddy Raj Rajaratnam but never in his wildest dreams considering giving Rajaratnam illegal insider tips in exchange for “some modest benefit” to himself. That doesn’t seem to be going well, does it? If you’re rooting for the defense, you can’t be thrilled by the sheer number of board-meeting/call-to-Raj/profitable-trade sequences, the evidence of possible financial benefits to Gupta, and most disappointingly of all the fact that Gupta is not going to get up on the stand and explain how this was all a big misunderstanding.
So let’s overcorrect and declare him guilty and move right into sentencing. A while back I put up a chart that used some basic inputs and rudimentary knowledge of the sentencing guidelines to predict how insider traders would be sentenced, and it worked okay. In particular, it gave Raj Rajaratnam just over 10 years in jail; a judge gave him 11.*
Since then there have been more Galleon convictions and sentences, none of which are wildly out of line with predictions. There was also Garett Bauer and Matthew Kluger, the “thuggish” insider trader who got a record-setting sentence for their 17-year, $37mm insider trading scheme. Here’s an update of the chart for Rajat Gupta’s consideration: Read more »