The Billionaire’s Apprentice | Anita Raghavan

Wickedness on Wall Street

In the tradition of Den of Thieves, James B. Stewart’s classic on insider trading scandals on Wall Street in the 1980s, and more lately books like Andrew Ross Sorkin’s Too Big to Fail, comes Anita Raghavan’s all-encompassing saga of intrigue and insider trading set in 1990s and 2000s Wall Street.

The story of how the revered Rajat Gupta, much like the sorcerer’s apprentice in the poem by Goethe, gets inducted into the dark arts by the Sri Lankan-born hedge fund billionaire Raj Rajaratnam, has been the subject of hot debate, disbelief, even anguish. In the magnum opus that is The Billionaire’s Apprentice, Malaysian-born Indian-American Anita Raghavan, who has reported for The Wall Street Journal and Forbes, recreates the events of the time.

Insider trading, which takes no more than a phone call, or even an IM (instant message), is traditionally a difficult crime to prove. However, the federal government’s first-time use of wiretaps on Rajaratnam’s phones, for as long as nine months, yielded an arsenal of incriminating data.

Tips came from sources as diverse as South Asian executives at Silicon Valley, a sexy hedge fund manager named Danielle Chiesi, an Intel employee-turned-informant called Roomy Khan, and from the most devastating source of all, two McKinsey & Co. consultants who broke the holy grail of consulting—client confidentiality.

Raghavan zones in on the action in the offices of the Galleon Group, where hedge fund boss Rajaratnam sits in his office with a glass partition, working the phones and yelling out orders to the rows and rows of traders sitting outside.

“Buy Goldman Sachs, Buy Goldman Sachs" is one of the most dramatic moments in the book, where at 3.57.44 pm on the evening of 23 September 2008, Galleon begins frantically accumulating $25 million (around 148.5 crore) stock in Goldman Sachs, less than 2 minutes, 16 seconds before the New York Stock Exchange is due to close.

The Billionaire’s Apprentice—The Rise of the Indian-American Elite and the Fall of the Galleon Hedge Fund: Hachette, 493 pages, Rs499
The Billionaire’s Apprentice—The Rise of the Indian-American Elite and the Fall of the Galleon Hedge Fund: Hachette, 493 pages, Rs499

It’s all very scandalous, and rather reckless, and Raghavan captures the trades in those years, and the fortunes made on trading on companies like Polycom, AMD, even Google, Hilton Hotels and finally, Goldman Sachs—each one of these on insider tips.

But sadly there is very little of Rajat Gupta in the book. If there is a billionaire’s apprentice at all, it must be Anil Kumar, the McKinsey consultant-turned-federal informer who passed on tips to Rajaratnam over several years. Kumar was paid over a million dollars, in the name of his housekeeper Manju Das, deposited in a Swiss account.

There are still question marks over the guilt of Gupta, who has been sentenced to two years of prison but remains free on appeal. Much of the evidence against him is circumstantial. More importantly, the prosecution hasn’t managed to prove that Gupta gained from passing on the information he is accused of leaking, apart from a possible indirect benefit through a partnering on the Galleon International fund.

Raghavan, however, doesn’t get into these complexities. Though she dips into history and tells us about Gupta’s father Ashwini Kumar Gupta, she doesn’t manage to get Gupta’s side of the story at all.

The closest we get to Gupta is during his trial, a proceeding for which he sits in quiet dignity with his wife and four daughters. After the guilty verdict, there are the anguished reactions of the Guptas and of their friends and associates, who suddenly cut them off. One of these, writes Raghavan, is Adil Zainulbhai, chairman of McKinsey & Co. India, a protégé whose children Gupta had spent time with, helping them with their essays on admission to US universities.

Raghavan’s book is full of little details like this. Whether it is Rajaratnam conducting interviews in topless bars or forcing loss-making traders to wear lingerie for a day, or the trades themselves, the book is a garrulous, gossipy and scandalous read. Its cast of 81 characters tends predominantly to feature South Asians, whether criminals or enforcement officials like Preet Bharara and Sanjay Wadhwa. And while Raghavan may have set out to chronicle the “elite Indian-Americans", for a street awash in leaks and insider tips, it seems a little discriminatory that we have barely any Anglo-Saxon fraudsters.

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