Wednesday, 20 August 2014
Last updated 2 hours ago
Mar 14 2011 | 2:51pm ET
The insider-trading trial of Galleon Group founder Raj Rajaratnam resumed today as the first of the government's star witnesses girded for cross examination.
Anil Kumar, a former director at consultancy McKinsey & Co., was to continue his testimony this morning. During his first stint on the stand on Thursday, Kumar testified that Rajaratnam, a friend from business school, had paid him nearly $3 million in exchange for confidential information about McKinsey clients.
On Thursday, Kumar, who has pleaded guilty in the case and is cooperating with prosecutors, said he tipped Rajaratnam off about Advanced Micro Devices, and jurors heard a tape—one of the thousands of wiretaps at the heart of the case—of Rajaratnam and Kumar discussing an AMD transaction.
"You cannot go wrong," Kumar is heard to say.
Today, Kumar is expected to talk more about AMD, as well as transactions involving Business Objects SA, Cisco Systems, EBay Inc., Samsung Electronics and Spansion Inc. But the fireworks will really start when prosecutors finish with him and the defense gets its first shot at one of the people it says are lying to "save their own skins."
In his opening statement last week, Rajaratnam lawyer John Dowd warned jurors about the "monstrous lie" Kumar would tell on the stand. The payments he received—and, as Dowd pointed out, "hid" in an overseas shell company and "failed to report" to the Internal Revenue Service—were merely "honest payments," "consulting fees for his advice in the Indian and South Asian investment markets."
"He is trying to pass the blame to Raj in order to get a free pass from the government," Dowd alleged, asking, if Kumar was Rajaratnam's "mole" inside of McKinsey, why would Rajaratnam have hired him away from the consulting firm. And, if Kumar had a pipeline of confidential information, why did he do so badly during his two years as a portfolio manager at Galleon?
On the stand last week, Kumar said his deal with prosecutors requires him to tell the truth, and that if he doesn't, the leniency promised him would not come.
"That would be a very big mess," he said.
Aug 4 2014 | 7:42am ET
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The July/August 2014 issue is our largest in years—filled with the best trading strategies and stories from 43 years of being the primary publication for commodity, stock, options and forex traders.
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