New York: Raja Rajaratnam , prime accused in the insider trading trial, got "red hot" information on a "super-confidential" business deal in the high profile case that has also brought to fore "intimate relationship" and a mysterious "India Book".
The 53-year-old Sri Lankan billionaire also warned another wayward manager not to reveal inside securities secrets with her "little boyfriends," according to testimony and wiretaps presented on Monday during the hearing in the biggest insider trading case in decades.
Former McKinsey director Anil Kumar, an Indian-American, told a jury on Monday that he provided confidential information to Mr. Rajaratnam , founder of Galleon Group, on a "super-confidential" deal in 2006 involving the acquisition of ATI Technologies Inc by Advanced Micro Devices Inc (AMD).
The central question of the insider trading case is whether Mr. Rajaratnam earned $ 45 million by using leaked confidential information.
His lawyers say that Mr. Rajaratnam conducted his business based on information that was already in the public domain and through research. Prosecutors allege Mr. Rajaratnam made $ 20 million in illegal profits from the ATI tip-off.
Mr. Kumar, who has already pleaded guilty said, that he received a $ 1 million "bonus" for the information he gave on the AMD-ATI deal.
"I almost fell off my chair," he added, recalling the call he got from Mr. Rajaratnam offering him the money.
On the second day of Mr. Kumar's testimony, the prosecutors played several phone recordings of conversations between him and Mr. Rajaratnam including one on August 15, 2008, in which Kumar said that parties had a "shake hand" on the deal.
After speaking with Mr. Kumar, the Sri Lankan billionaire called Danielle Chiesi, a hedge fund trader, who has already pleaded guilty. "AMD will not go bankrupt," he told her.
"We have to keep radio silence on this. OK?" Mr. Rajaratnam tells Chiesi on one call, and Chiesi responds, "Oh, Please.
A month later when Mr. Kumar told Mr. Rajaratnam that the deal was going through, the latter again called Ms. Chiesi and told her the date was set for October 7.
"I'm a warrior… They can't kill me… October's my month," Mr. Rajaratnam said. In the conversation, Ms. Chiesi feared that she would be investigated.
Ms. Chiesi also reportedly had an affair with former IBM executive Bob Moffat, who has also pleaded guilty.
John Dowd, Mr. Rajaratanam's lawyer, has asserted that Mr. Kumar had hidden from McKinsey the money he received from Mr. Rajaratnam for above-board consultations and that Mr. Kumar was guilty of tax evasion from the IRS for five years.
So far, 19 people have pleaded guilty, but Mr. Rajaratnam , who has been charged with 14 counts of conspiracy and security fraud, denies any wrongdoing.
Another Indian-American, Rajat Gupta, a former board member of Goldman Sachs and Proctor & Gamble, has been charged by the Securities and Exchange Commission for sharing confidential information with Mr. Rajaratnam.
Mr. Kumar also admitted that he told Mr. Rajaratnam that McKinsey's client, AMD, was planning to spin off its manufacturing operations and get a multi-billion dollar investment from Abu Dhabi's Mubadala Development Co.
Mr. Kumar said that Mr. Rajaratnam asked him to tell Mr. Ruiz to stop talking to Ms. Chiesi, who was spreading the information around and it was no longer exclusive.