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Rajat Gupta, Champion Multitasker

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Surely everyone has been on a boring call in listen-only mode, and gotten another call, and picked it up on the handset while leaving the first call on in the background just in case anyone was like "and what do you think Rajat? Rajat? Rajat are you there?" But you wouldn't expect anyone to make a federal case of it:

Phone records entered into evidence showed that on March 12, 2007, at about 11:31 a.m., Mr. Gupta, from the Connecticut offices of McKinsey, participated in a Goldman board audit committee call that lasted 15 minutes. The meeting was to offer a preview to the directors of the earnings announcement that would be released the next day. That same day, at 11:32 a.m., records show that a phone number at Galleon called Mr. Gupta’s line in Connecticut — a call that also lasted 15 minutes.

During cross-examination, a lawyer for Mr. Gupta got [wonderfully named FBI agent Joe] Barnacle to concede that there was not a way to determine whether these calls were connected to each other or were merely two separate calls.

Honestly, if you looked at my phone records from the times I was actually ... um ... employed as some sort of professional, you'd probably find equal-and-overlapping calls with at least a quarter of the board calls, org calls, update calls, and other mass time-wasters that I dialed in to. That doesn't mean I plugged anyone nefarious into those calls - it just means I was bored and/or taking care of more pressing things and/or ADD. Of course I never participated in any board calls as a director, but still - that call was for management to tell the audit committee what earnings would be, not to glean Gupta's consulting wisdom.

I feel like if I were running Rajat Gupta's defense my theory would be something along the lines of "he was a shit, shit board member, but not a criminal."* Leaving a super-secret board call on hold or in the background while you chat with your friend is not exactly a textbook way to fulfill your fiduciary duties, but it's, at least in the limited context of a federal criminal trial, better than plugging your friend into that call.

Similarly, I have floated the notion that Gupta's famous (alleged!) September 2008 call to Rajaratnam, disclosing that Warren Buffett was going to buy a stake in Goldman, was not an illegal insider tip but rather a (successful) effort to drum up interest in Goldman's public offering of stock later that evening. Now, sure, Lloyd testified that directors were told not to share any details of board meetings with outsiders, but maybe Gupta missed those instructions? While he had the call on hold?

Testimony Suggests Gupta Let Hedge Fund Manager Listen In on Goldman Calls [DealBook]

* Is this theory rendered more or less likely by the fact that Gupta was the head of McKinsey? Best practices etc.


Rajat Gupta's Lawyers May Try The "Everybody Was Doing It" Defense

There is much to like in this morning's Journal article about the Rajat Gupta insider trading prosecution, including a nice illustration of how the inside information that Gupta allegedly passed to Raj Rajaratnam actually seems to have been out in the market already. But let's start with the transcript of the call between Raj Rajaratnam and his trader Ian Horowitz, which the Journal has redacted not for confidentiality but for saltiness: Just so you can see Raj Rajaratnam saying "fuck" a lot, the full transcript of that call is here. But, anyway, the Journal story:

Rajat Gupta: My Buddy Raj is a Big, Fat Liar*

All things considered, Rajat Gupta would still prefer not to go to jail.