Tuesday, 5 May 2015
Last updated 9 hours ago
Mar 15 2011 | 1:07am ET
The prosecution's star witness in the Raj Rajaratnam insider-trading trial testified that he passed "super-confidential" information on to the Galleon Group founder, and that on at least one occasion Rajaratnam did the same for him.
In his second day on the stand, Anil Kumar, a former director at McKinsey & Co., said he told Rajaratnam about two deals he was working with Advanced Micro Devices on in 2005 and 2006: the company's proposed acquisitions of Nvidia Corp. and ATI Technologies.
"I told him this was red hot and not to be discussed with anyone," Kumar testified. Kumar, who has pleaded guilty as part of a deal with prosecutors, told Rajaratnam that ATI would be acquired for about $5 more per share than it was trading at the time.
"He said, 'Are you absolutely sure?'" Kumar recounted. "He said, 'Wow, this is very useful."
On the day the deal was consummated in July 2006, Kumar said Rajaratnam called him to say, "We're all cheering you at the office right now. You're a star. You're a hero."
But, when Rajaratnam sent him confidential documents from AMD competitor Intel Corp., Kumar said he was "terrified of having such documents in my office."
"My office was an open-door office. People walked in and out," Kumar explained. "To see an Intel document was not appropriate at all, so I asked my assistant to shred it."
Kumar said Rajaratnam didn't say where he got the 2005 slides detailing Intel's plans for the year, only telling Kumar, "I know you're working at AMD—these might help."
Kumar, who previously testified that Rajaratnam had agreed to pay him $250,000 a year for confidential information about McKinsey clients, said that the hedge fund honcho became dissatisfied with that arrangement soon after striking it. But Kumar sought to preserve the fiction that he was a legitimate consultant for Galleon, even if he was hiding the "work" from McKinsey.
"I thought a consultant arrangement was more appropriate," Kumar said, telling of how he rejected Rajaratnam's offer to pay him based on Galleon's profits on his tips. "Seeing that shares were being bought seemed more like a crime to me."
Other times, Rajaratnam was more generous: The December after the AMD-ATI deal was announced, Kumar said, Rajaratnam called to say, "I want to give you $1 million. Tell me where to send it."
"I almost fell off my chair," Kumar recalled. The bonus was paid to a bank account in India.
Jurors yesterday also heard more than a dozen wiretaps, following the three they heard on Thursday, including ones featuring former Rajaratnam co-defendant Danielle Chiesi and another identifying a third McKinsey consultant who may have passed confidential information to Rajaratnam's brother Rengan.
Mar 20 2015 | 12:45pm ET
StreetWise Partners, a non-profit organization that works with low-income individuals to help them overcome employment barriers, raised over $275,000 at the 2015 Raising the Ante Charity Poker Tournament and Casino Event last Wednesday evening at Capitale. Here are some photos from the event. Read more…