Goldman Ex -Dir. Rajat Gupta To Be Charged for Rajaratnam Tips
Former Goldman Sachs director Rajat Gupta will surrender to the FBI tomorrow to face criminal charges related to Raj Rajaratnam. The charges are likely to pertain to allegations he gave Raj confidential information about Goldman Sachs, who then traded on the information:
Authorities said Mr. Gupta gave Mr. Rajaratnam advanced word of Warren E. Buffett’s $5 billion investment in Goldman Sachs during the darkest days of the financial crisis in addition to other sensitive information affecting the company’s share price.
Gary Naftalis, Gupta's lawyer, says:
Gupta's lawyer Gary P. Naftalis said Tuesday night that his client and Rajaratnam communicated for "legitimate reasons." He said his client didn't trade in any securities, didn't tip Rajaratnam so he could trade and didn't share in any profits.
[More...]
"The facts demonstrate that Mr. Gupta is an innocent man and that he has always acted with honesty and integrity," Naftalis said in an emailed statement.
Raj gave his first interview to The Daily Beast/Newsweek. It's worth reading. He describes how on the day of his arrest, the agents tried to get him to wear a wire and get Gupta. They tried again two weeks before his sentencing. No dice.
As late as two weeks before the sentencing, Rajaratnam was still being asked by the government to turn on Gupta. But he wouldn’t wear a wire, he says, so he could sleep at night. “Anil Kumar’s son worked at Galleon one summer. I used to vacation with Rajiv Goel’s family. Their families knew my family. You don’t think this is going to haunt these guys? They wanted me to plea-bargain. They want to get Rajat. I am not going to do what people did to me. Rajat has four daughters.”.
Here's a curious comment by Raj:
There are two types of plea bargains. One is, you cooperate with the government. You finger 10 other people. The other is a plea bargain without cooperation.” The white defendants all pleaded without cooperating; they did not wear a wire. “The South Asians all did the plea bargain with fingering,” he notes sourly. “The Americans stood their ground. Every bloody Indian cooperated—Goel, Khan, Kumar.” He puts it down to “the insecurity of being an immigrant, lawyers bullying them into that position.”
Interestingly, Raj still mostly believes in the American justice system:
“In Sri Lanka I would have given the judge 50,000 rupees and he’d be sitting having dinner at my house. Here, I got my shot. The American justice system is by and large fair.”
...“In your case too?” I ask. “I said by and large.”
He describes his arrest and this unclassy (but all too typical) comment by an FBI agent:
As they led him away from his family, Rajaratnam says [FBI Agent B. J.] Kang told him, “Take a good look at your son. You’re not going to see him for a long time.” He added, for good effect, “Your wife doesn’t seem so upset. Because she’s going to spend all your money.”
The FBI denies the agent made the comments. But they can't deny this deplorable perp walk.
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