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Raj Rajaratnam Did Not Appreciate Rajat Gupta's Attempt To Leave The Goldman Board, Join 'The Billionaire Circle'

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As previously discussed, one of the bigger revelations that could cause issues for Raj Rajaratnam is that his "business associate and friend," Rajat Gupta, passed him inside information obtained from Gupta's post as a board member of Goldman Sachs, which the Galleon founder proceeded to (allegedly!) trade on. In one particular instance, on October 23, 2008, Gupta rang up Rajaratnam twenty three seconds after an informative call with Lloyd Blankfein about the company's financial situation. The swiftness with which Gupta funneled information to his pal presumably pleased Raj greatly, as it was a characteristic he looked for in all of his tipsters, going so far as to put it at the top of the 'must haves' in the listing for the gig. So you can imagine that the hedge fund manager was not at all pleased when Rajat tried to resign from the Goldman board and dry up his well.

On September 9, 2008 Gupta apparently submitted a resignation letter to Goldman, as he hoped to take a job as a senior advisor at KKR. Luckily for Rajaratnam, Lloyd Blankfein convinced Gupta to stay on board, fearing the market's reaction to having a director resign at that point in time. Prior to LB sitting Gupta down for a talk, though, the prospect of losing one of his best men was very real to Raj-Raj, who likely sweat bullets for weeks over the situation, including during an August 15, 2008 call, released Friday by prosecutors, in which he discusses Gupta's potential move with Anil Kumar. At first, Raj remains calm, thinking out the why's and the how's of it all.

“Goldman is one board right,” Mr. Rajaratnam says on the recording. “And he’s, you know, he’s essentially an observer status, right? He’s not in there, you know, rolling up his sleeves.”

So maybe it's this conflict of interest business, Raj thinks aloud, and Rajat is just trying to do things by the book. Or is it the fact that Rajat is a greedy jerk, who apparently doesn't care he's leaving Rajaratnam in the trenches, sans material, non-public information?

“But is it really that he was so greedy for the $12 million that K.K.R. has offered him?” Mr. Kumar asks on the recording.

It's like all this selfish prick can think about is money, you know? Money and prestige.

"I think he wants to be in that circle,” Mr. Rajaratnam says. “That’s a billionaire circle, right? Goldman is like the hundreds of millions circle, right?”

He may also be obsessed with Henry Kravis.

“My analysis of the situation is he’s enamored with Kravis."

Plus, there's the fact that he's really lazy. It's not like he knows what it's like to do an honest day of hard work. You think Rajat has any idea how exhausting it is gathering inside information to (allegedly) trade on? He doesn't know jack.

Rajaratnam added: “And I think here he sees the opportunity to make $100 million over the next five years or 10 years without doing a lot of work.”

But this isn't about being worried about losing a top earner at all! I hope no one's thinking that.

Mr. Rajaratnam and Mr. Kumar also seem worried about their friend. “At some point, what I worry about is that there can be this massive implosion in him,” Mr. Kumar said. “He didn’t seem comfortable,” Mr. Rajaratnam said. “He seemed like he was tormented, right?”

Best to pass on the KKR job and keep the stress levels down. This is coming from a friend, who just wants what's best for the Gups.

Gupta Sought To Quit Goldman In 2008 [Dealbook]


The Universe Has Good News And Less Good News For Rajat Gupta

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: 1. Rajat could go to jail for twenty years but probably won't ("Gupta faces up to 20 years in prison on each of the fraud charges and up to five years for the conspiracy charge. But his sentence is likely to be significantly lower under federal guidelines.") 2. Sentencing is scheduled for October 18 so he's got the whole summer and then some into a Zen place about going to prison. Also! Plenty of time to do all those things he was too busy for when he was working. This is gonna be his time. Time to taste the fruits and let the juices drip down his chin. The summer of Rajat! Gupta Found Guilty Of Insider Trading [WSJ] *Friend Rajat's ass.