The most common refrain when insider trading or other such fraud occurs on Wall Street is the question of why? Why did he/she do it? Money is often times too simple an explanation (especially when there are mommy issues to be explored) but other times it's not. Like in the example of former McKinsey partner Rajat Gupta, i.e. the guy who called Raj with information about Goldman Sachs 23 seconds after getting off the phone with Lloyd and the rest of the board. In Gupta's case, he just 1) seriously wanted that cash and 2) he wanted is ASAP.
This theory was previously floated by Rajaratnam, during a tapped phone conversation we heard during his trial. Raj-Raj told pal Anil Kumar:
“I think he wants to be in the [private equity] circle. That’s a billionaire circle, right? Goldman is like the hundreds of millions circle, right?” He 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.”
And today backed up by an old buddy.
While Gupta was devoted to his philanthropy in India, his quest to amass great wealth led him to lapses in judgment, says Bala Balachandran, dean of the Great Lakes Institute of Management in Chennai, India, and a friend for almost three decades.
“He wanted a billionaire’s life and the question for him was how could he become a billionaire in a short time,” Balachandran says. “You’re an eagle, so why do you want to be with these chickens who can’t fly?,” Balachandran says he told Gupta. “You’ll get the chicken flu."
Not wanting to get the chicken flu/soar among his eagle peers/making bank, Gupta made the decision to help Raj out with some material, non-public information and also set up a little side biz to bring in extra cash.
At McKinsey, a firm known for keeping secrets, Gupta harbored a few of his own. As the managing director and then as senior partner of McKinsey for four more years before he retired, he ran his own consulting business on the side -- a violation of McKinsey rules.
He and Anil Kumar, a former McKinsey partner who last year pleaded guilty to passing confidential information to Rajaratnam, set up their own consulting company. Gupta also independently advised Genpact Ltd, a Gurgaon, India-based firm that manages business processes for other companies. That work, too, broke McKinsey’s rules.
Perhaps McKinsey didn't hear that said rules don't apply to eagles on the fast track.
Rajat Gupta Secretly Defied McKinsey Before SEC Says Rajaratnam Was Tipped [Bloomberg]
