In a riveting account that combines the high drama of the US federal government unravelling an insider trading plot with the inspirational sweep of south Asian immigrants rising from nothing to the corridors of corporate power, leading ultimately to the account of the takedown of Raj Rajaratnam and Rajat Gupta, author Anita Raghavan criss-crosses the globe from Wall Street boardrooms to IIT-Delhi as she uncovers the plot. Her new book, The Billionaire?s Apprentice, comes through as a briskly-paced cops-and-robbers story that plays out among the upper echelons of Wall Street and Silicon Valley.
Starting with the collapse of the Galleon Group, a hedge fund that managed over $7 billion in assets, on account of insider trading charges, the book maps a sensational case that pits US attorney for the southern district of New York, Preet Bharara?himself the son of Indian immigrants?against the formidable ?rock stars? from the south Asian business community: Galleon?s founder Rajaratnam, a Sri Lanka-born stock trader-turned-stockster, and Gupta, former head of the world?s most respected management consultancy firm, McKinsey & Co. ?
Till not long ago, Rajaratnam and Gupta were two of the most admired business figures from the south Asian community to have made a mark for themselves on Wall Street. Both came to the US for higher studies, and like many top students at the time, sought graduate business degrees: Rajaratnam at Wharton School, Gupta at Harvard.
Both became rich and reputable, mingling in the most exclusive social and business circles. Rajaratnam was dedicated to helping victims of land mines, while Gupta took up the cause of fighting AIDS and malaria globally. Neither needed to engage in a serious regulatory fraud such as insider trading.
And yet, in separate trials, juries convicted both men on multiple counts of securities fraud. Investigators found that Rajaratnam had been given insider tips and used this information to make millions of dollars by trading shares. Gupta was one of his informants. While Rajaratnam received an 11-year sentence, the longest in American insider trading history, Gupta got two years.
The book goes back repeatedly to Gupta?s background as an orphan who made it to the IIT, supported his siblings, joined the Ivy League and then managed to touch dizzying heights in the US corporate sector. The account lists out views of colleagues and peers, and pretty much all the possible reasons why the man should not have gotten into one of the most serious white-collar crimes in the US, knowing fully well the risks his actions could carry. And this at the pinnacle of his career, when money was not an issue and the future beckoned.
What?s clear, though, is that the worst thing he did was pass confidential information, disclosed only to the board of Goldman Sachs, to Rajaratnam. At a time when the financial markets were in turmoil, Goldman, on July 29, 2008, received a critical infusion of $5 billion from Warren Buffett?s Berkshire Hathaway. Within minutes, Gupta was found to have tipped off Rajaratnam, enabling him to trade ahead of the public disclosure. The only phone conversation between Rajaratnam and Gupta that the US government was able to tap took place in the early evening of July 29 that lasted 18 minutes. The conversation is, to say the least, ?revealing?. Gupta sounds unsure and confused at times, and is looking to his friend for career advice, perhaps an indication of his lobbying for a bigger role in the Galleon Group?and perhaps more money.
The following month, when Gupta learnt Goldman was about to report a loss, he called Rajaratnam 23 seconds later. Galleon soon began dumping Goldman stock. The cases against these two men are the twin pillars of Anita Raghavan?s business thriller. Raghavan?s journalistic and writing skills come to the fore on every page, making a corporate story that reads like a thriller, capturing the protagonists as they climb to the pinnacle of power inside the top boardrooms of corporate America, get seduced, and fall in a spectacular insider trading scandal. A compelling read.
