Data leakage and stocks
30 Oct 2012 4:06 AM IST
This Diwali, Mukesh Ambani will like you to be in mourning. Why, you may ask? This is not a season of Dhirubhai’s departure to the happy hunting ground. No, it is not. But yes, the present Ambani scion has lost a friend to the American penitentiary system – Rajat Gupta – formerly of the McKinsey and Company, a corporate body of America, more secretive than the Central Intelligence Agency.
The CIA has brought about a lot of regime changes by killing government heads of countries that would not kow-tow to the USA. One does not know, whether Mckinsey and Co have done such ‘wet’ jobs. May be, they have outsourced their targets to the CIA.
Rajat Gupta was a product of that system where the law of the land was to do his bidding, and not the other way round. Gupta was found guilty of an act that a common thief would do – data leakage about the stock market movements of specific scrips on which the company he headed then, Goldman Sachs, traded.
The racket was simple. Gupta would pass on the Goldman Sachs internal information messages to Raj Rajarathnam, a Sri Lankan American who headed the hedge fund, Galleon Group. Rajarathnam would then place orders for those Gupta recommended scrips, and sell them when Gupta’s information fructified in the target company and its share price rose in the New York Stock Exchange.
This simplistic theft of the money of investing public could have gone on for any length of time, considering that Rajat Gupta and Rathnam were considered pillars of their societies. But obviously some other people in the USA became aware of this fraud. They tipped the Federal Bureau of Investigation (FBI), and the Bureau placed wire taps on the phones of Rajarathnam.
This led them to a treasure trove of information about the racket and the Bureau had to pick up Rajarathnam and Gupta and put them into custody. Rajarathnam’s case was the first for prosecution. He was jailed for 11 years, the longest sentence for insider trading in the USA.
Gupta was sentenced last week. But during the trial process, the linkages of the Indian bourgeoisie with that of their international counterparts became evident in such stark detail. India being a larger economy and its scions having greater weight than the Sri Lankan varieties.
Mukesh Ambani, Rahul Bajaj and their ilk appealed to the conscience of the American power brokers and sought leniency from the American system of law. Of all people Kofi Annan, the former secretary general of the United Nations, the Microsoft chairperson, Bill Gates came out in the open burnishing the image of Gupta.
Obviously this had an impact on the American judiciary to such an extent that Gupta was merely given a slap on the wrist with a two-year jail sentence and $ 500,000 fine. He was obviously not just a thief who would pilfer from the UN food programme stocks in African countries only out of hunger, who could be dragged screaming and kicking to a jail to do time that would at the least be as long as that of Gupta.
Gupta worked in the nether world of high finance that was global in scope. So he was special for the American ruling class, unlike that food pilferer in any sub-Saharan country. There could of course be an angle to it born out of the connection between Gupta’s last tip to Rajarathnam in 2008. He had told his ally, the Sri Lankan American that Warren Buffet, one of the richest men in the USA and his company, Berkshire Hathaway, was to infuse capital into the ailing Goldman Sachs.
That Buffet was interested in the company was declared and the prices of the Goldman stock rose in Wall Street, Rajarathnam brought home the profit, obviously to be shared between him and Gupta.
But Buffet was also so generous to (almost like his philanthropy) Gupta that he allowed his key aide, Ajit Jain to dump on Rajarathnam to save Gupta. In a defensive testimony in favour of Gupta, Jain told a tale. He said that Rajat Gupta had told him once, he had lost almost $ 10 million investment in a fund managed by Rajarathnam. Jain, at his coyest best, even shared with the US court that Gupta could not have shared information with Rajarathnam as he had hinted to his friend, Jain, that Sri Lankan American had played ‘hanky panky’ with Gupta’s fund.
But for Preet Bharara, the prosecutor could prove to the court that all these testimonies of the defence were a smokescreen being attempted to save Gupta. The court had no way of letting Gupta go unpunished. That inability led to the two year sentence – when compared to Rajarathnam, piffling at best – and the fine. So, considering the emotions expressed by Mukesh Ambani and the rest, you could do choose to have dark Diwali. Only then will you be considered a PLU (people like us).
Pinaki Bhattacharya is a senior journalist
The CIA has brought about a lot of regime changes by killing government heads of countries that would not kow-tow to the USA. One does not know, whether Mckinsey and Co have done such ‘wet’ jobs. May be, they have outsourced their targets to the CIA.
Rajat Gupta was a product of that system where the law of the land was to do his bidding, and not the other way round. Gupta was found guilty of an act that a common thief would do – data leakage about the stock market movements of specific scrips on which the company he headed then, Goldman Sachs, traded.
The racket was simple. Gupta would pass on the Goldman Sachs internal information messages to Raj Rajarathnam, a Sri Lankan American who headed the hedge fund, Galleon Group. Rajarathnam would then place orders for those Gupta recommended scrips, and sell them when Gupta’s information fructified in the target company and its share price rose in the New York Stock Exchange.
This simplistic theft of the money of investing public could have gone on for any length of time, considering that Rajat Gupta and Rathnam were considered pillars of their societies. But obviously some other people in the USA became aware of this fraud. They tipped the Federal Bureau of Investigation (FBI), and the Bureau placed wire taps on the phones of Rajarathnam.
This led them to a treasure trove of information about the racket and the Bureau had to pick up Rajarathnam and Gupta and put them into custody. Rajarathnam’s case was the first for prosecution. He was jailed for 11 years, the longest sentence for insider trading in the USA.
Gupta was sentenced last week. But during the trial process, the linkages of the Indian bourgeoisie with that of their international counterparts became evident in such stark detail. India being a larger economy and its scions having greater weight than the Sri Lankan varieties.
Mukesh Ambani, Rahul Bajaj and their ilk appealed to the conscience of the American power brokers and sought leniency from the American system of law. Of all people Kofi Annan, the former secretary general of the United Nations, the Microsoft chairperson, Bill Gates came out in the open burnishing the image of Gupta.
Obviously this had an impact on the American judiciary to such an extent that Gupta was merely given a slap on the wrist with a two-year jail sentence and $ 500,000 fine. He was obviously not just a thief who would pilfer from the UN food programme stocks in African countries only out of hunger, who could be dragged screaming and kicking to a jail to do time that would at the least be as long as that of Gupta.
Gupta worked in the nether world of high finance that was global in scope. So he was special for the American ruling class, unlike that food pilferer in any sub-Saharan country. There could of course be an angle to it born out of the connection between Gupta’s last tip to Rajarathnam in 2008. He had told his ally, the Sri Lankan American that Warren Buffet, one of the richest men in the USA and his company, Berkshire Hathaway, was to infuse capital into the ailing Goldman Sachs.
That Buffet was interested in the company was declared and the prices of the Goldman stock rose in Wall Street, Rajarathnam brought home the profit, obviously to be shared between him and Gupta.
But Buffet was also so generous to (almost like his philanthropy) Gupta that he allowed his key aide, Ajit Jain to dump on Rajarathnam to save Gupta. In a defensive testimony in favour of Gupta, Jain told a tale. He said that Rajat Gupta had told him once, he had lost almost $ 10 million investment in a fund managed by Rajarathnam. Jain, at his coyest best, even shared with the US court that Gupta could not have shared information with Rajarathnam as he had hinted to his friend, Jain, that Sri Lankan American had played ‘hanky panky’ with Gupta’s fund.
But for Preet Bharara, the prosecutor could prove to the court that all these testimonies of the defence were a smokescreen being attempted to save Gupta. The court had no way of letting Gupta go unpunished. That inability led to the two year sentence – when compared to Rajarathnam, piffling at best – and the fine. So, considering the emotions expressed by Mukesh Ambani and the rest, you could do choose to have dark Diwali. Only then will you be considered a PLU (people like us).
Pinaki Bhattacharya is a senior journalist
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