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Galleon founder’s web of friends were crucial

business Updated: May 13, 2011 02:22 IST

As Raj Rajaratnam and Anil Kumar, a McKinsey consultant, walked out of a fund-raiser in Manhattan, Rajaratnam pulled his friend aside and made him an offer: would Kumar provide him with insights for $500,000 a year?

Weeks later, he accepted.

That deal was one of the many connections Rajaratnam made over the years, giving him access to the inner secrets of dozens of companies.

In many respects, he was no different from Wall Street stock pickers who diligently network with corporate executives and industry experts. But Rajaratnam sought out information that was confidential, beyond the reach of research, and illegally traded on it, the jury that convicted him on Wednesday on all 14 counts of securities fraud and conspiracy found.

His colleagues marvelled at the deep set of contacts he had cultivated in Silicon Valley and on Wall Street trading floors.

But his conversations with his network were secretly recorded by federal agents beginning in 2008. The portrait that emerges from those tapes is of a man who bolstered his talents as a money manager by tapping the insecurities and desires of those within his circle for lucrative — and illicit — stock tips.

Rajaratnam altered his approach, depending on the person or the situation. He could be direct at times, demanding information from his sources. He could also be solicitous, such as calling to check in with an informant after she underwent an operation.

Above all, he was a good listener, saying little as those on the other end of the phone kept talking.

“Getting information that others didn’t have was very valuable,” said a prosecutor during the trial. “It meant the defendant knew tomorrow’s news today, and it meant big money.”

The New York Times

Talk was not cheap for the Sri lankan

New York: Raj Rajaratnam might have fared better had he just shut up. His conviction on Wednesday was anchored in 46 tapped phone calls that prosecutors called “devastating” evidence of insider trading.

The calls showed Rajaratnam chatting easily, often about information related to trades he made.

“Ah Raj, eBay is gonna do massive layoff on Monday,” Anil Kumar said on October 3, 2008.

“They’re gonna do what?” Rajaratnam responded.

“Layoffs on Monday. Sixteen hundred of them, eBay would announce on October 6.”

The voices of Rajaratnam boomed over loudspeakers during the two-month trial.