Galleon

John Gapper

The impression I am left with from reading George Packer’s account in the New Yorker of the Raj Rajaratnam prosecution is of how the odds still favour the determined insider trader who takes precautions.

Packer recounts how the Rajaratnam case, which ended up as the biggest insider trading investigation ever known on Wall Street –  claiming scalps including Rajaratnam and Anil Kumar, a former McKinsey partner — gained momentum as a result of a single instant message conversation:

rajatgalleon: hey
rajatgalleon: u back
roomy81: i am here
roomy81: did not go any where
rajatgalleon: call me..just got back today
roomy81: please let me know on JNPR
roomy81: donot buy plcm till i het guidance
roomy81: want to make sure guidance OK

Not only was it very hard to mount a criminal case against Rajaratnam until that lead enabled prosecutors to tap his work and personal phones but it was incredibly labour-intensive for the lawyers and prosecutors. Read more

Andrew Hill

If you read anybody on the reputational threats facing McKinsey, it should probably be Walter Kiechel. As author of the definitive history of strategy consulting, The Lords of Strategy, he knows a lot about what goes on inside consultants’ heads.

On the Harvard Business Review blog, he’s used his knowledge and the latest revelations from the Galleon insider trading trial to explore “the beguilements…. beckoning to consultants over the last two decades”, in search of a better understanding of how Rajat Gupta, former head of McKinsey, “could have gotten himself into the current mess”.

(Gupta, who left McKinsey in 2007, is accused of sharing information, acquired in 2008 when he was a director of Goldman Sachs and Procter & Gamble , with Galleon founder Raj Rajaratnam. His lawyer has said the Securities and Exchange Commission’s civil charges of insider trading are “baseless”.) Read more