Wednesday, 30 July 2014
Last updated 5 hours ago
Jun 22 2012 | 12:35pm ET
Evidence that was not presented at the Rajat Gupta insider-trading trial is shedding light on another key Raj Rajaratnam relationship: That with Goldman Sachs sales executive David Loeb.
According to previously undisclosed e-mails and wiretapped phone calls, Loeb and the Galleon Group trader, who, like Gupta, was convicted on insider trading, communicated on almost a daily basis. Loeb and Rajaratnam would exchange e-mails everyday prior to Galleon's morning meeting, with the former offering the latter "tiddie biddies" about several technology companies. The closeness of the relationship—Galleon was Loeb's largest client by far—is further indicated by Loeb's nicknames for Rajaratnam and himself.
The Goldman salesman called the Galleon chief, who is serving an 11-year prison sentence, "Dr RR" and "big daddie," and dubbed himself "CBF," which The Wall Street Journal reports stands for "chunky but funky."
Neither Loeb, nor Goldman, nor the two other current Goldman employees currently under investigation in the Galleon case, have been charged with any wrongdoing. Nor is it clear that any of the information passed by Loeb in the communications—which U.S. District Judge Jed Rakoff did not allow to be introduced at Gupta's trial—with Galleon was material or confidential, or that Galleon traded on it.
In one set of communications, on Aug. 5, 2008, Loeb sought an "update" on Intel from another Goldman employee under investigation, Henry King. King sent a spreadsheet, in an e-mail with the subject line, "u would not believe this," showing an unexpected increase in production.
On Aug. 6, Loeb e-mailed Rajaratnam, "need to reach u with some PARTICULARLY important data" before the markets opened. Later that day, the two men spoke on a call recorded by the Federal Bureau of Investigation. While Loeb said that numbers weren't complete, Rajaratnam said, "It's still a good number."
"It's still a fucking good number, right?" Loeb responded.
A day later, the two men discussed Intel again, with Loeb warning, "this goes to you and Adam" Smith, a Galleon trader who has since pleaded guilty in the case, "only."
"Yeah," Rajaratnam said. "No, absolutely not, I don't talk to anybody."
"Yeah," Loeb added. "And then, you know, I tell a couple of guys on the Street, but you guys get the first call and that's it."
Later that month, Loeb e-mailed Rajaratnam information about Apple Inc. products. "This is production data, but it's directly from Apple and it's been pretty good on the production side."
Loeb's lawyer, Frank Wohl, told the Journal that the information his client gave to Rajaratnam "was not price-moving or a basis for buying or selling the stock."
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…