While we wait for Rajat Gupta to step away from the ISB Board (just as he has done at no less than five companies / entities), the Rajaratnam trial has begun. A star witness has already started his testimony -- this is a man named Anil Kumar, an old McKinsey hand who, by his own admission, fed Rajaratnam insider information on McKinsey clients he worked with. (Anil Kumar, incidentally, resigned from the ISB Board in 2009 after his involvement in the insider trading scandal became public). The prosecution has also played several conversations between Rajaratnam and his associates; one of them features Anil Kumar.
Some interesting bits, in no particular order:
Mr. Kumar ... testified that Mr. Rajaratnam told him in 2002 that Galleon had $100 million a year to spend on research ... Mr. Kumar said he made a couple of proposals to provide industry research to Mr. Rajaratnam, but the hedge-fund manager didn't respond.
Eventually, Mr. Rajaratnam told him at a charitable event that such industry research "wasn't really what I want," and proposed hiring Mr. Kumar as a private consultant for Galleon for $500,000 a year, Mr. Kumar testified.
“You work very, very hard and you’re underpaid,” Kumar quoted Rajaratnam as saying. “People have made fortunes while you were away in India, you deserve more for all your insights, so just keep track of your insights and share them with me.”
He said Rajaratnam insisted on paying him, saying “I know you will not remember to keep a list of ideas if you don’t get money from me.”
"[Rajaratnam] was asking me for a variety of information such as what is a company’s profit, their revenue, how they are doing in that quarter, if they had strategic plans,” Kumar said. “He kept asking me. I didn’t always know the answer but I felt that since I accepted the money I had a sort of obligation to him.”
"How’s the market treating you today?” Rajaratnam asked in another tape played for jurors after they discussed a deal involving Vishay Intertechnology Inc.
“Like a baby treats a diaper,” Smith replied, prompting giggles from Rajaratnam.