The Descent Of Man
This is one for the ages. Here’s New Yorker’s article detailing the Raj Rajaratnam - Rajat Gupta saga about insider trading.
A Dirty Business
An excerpt:
According to the government, two of Rajaratnam’s most important conversations in 2008 occurred on his office phone, which wasn’t tapped. On the afternoon of September 23rd, Rajat Gupta, the former head of McKinsey, joined members of the Goldman Sachs board on a conference call. They discussed Warren Buffett’s proposed investment of five billion dollars in the investment bank, which had been imperilled by the crash.
The conference call ended at 3:54 P.M. Sixteen seconds later, Gupta called Rajaratnam’s office. At 3:58, just two minutes before the markets closed, Rajaratnam gave an order to buy three hundred and fifty thousand shares of Goldman stock, worth forty-three million dollars. That night, the world learned of the Buffett investment. At the peak of the crisis, Gupta the Goldman board member’s first thought was to make sure that his investment partner Raj Rajaratnam could exploit the deal.
A month later, the drill was repeated: as Goldman prepared to announce an unexpected quarterly loss, Gupta called Rajaratnam, and Rajaratnam sold all his Goldman stock before the announcement. Two cell-phone wiretaps caught Rajaratnam telling colleagues about his Goldman tips.
The case was widely publicised, and built a lot of careers and reputations, particularly Preet Bharara’s.
It’s astounding how someone can be a master of the universe, earn their seat at the highest of tables, make ungodly amounts of wealth and still resort to petty thievery. Gupta did 1.5 years in prison.
Rajaratnam was sentenced to 11 years - the highest until then for insider trading. He was released after 7.5 years.
The article tells an important story1, one that’s no less relevant today. Do check it out.
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And has some excellent New Yorker cartoons!